Should You Lease Or Buy Your Next Car? It May Affect Your Mortgage.

Should you lease a new car, or should you buy one? Like most financial questions, the answer depends on your situation. For some people, leasing a car presents distinct economic advantages. For others, buying a car is the way to go.

There's plenty of online material to help you choose your optimal path, but this 3-minute piece from NBC's The Today Show serves as an excellent summary. In it, you'll learn about the basics of leasing a car, and for whom leasing can be a great fit. You'll also hear reasons to avoid a lease completely.

The NBC interview makes all of the following points :

• Leasing allows you to drive a car that may be "too expensive" to purchase
• Leasing puts you in a new car, with the latest safety features and gadgets, every few years
• Buying a car means that you have no mileage limits, and can sell at any time

For many people, it concludes, buying a car is preferable to leasing one, with a notable exception being those people who can claim their car or truck as a tax deduction. Be sure to check with your tax advisor if you plan to take that route.

However, for another group -- homeowners and active home buyers -- leasing a car can invite mortgage approval trouble. This is because a car lease payment is assumed by a mortgage underwriter to be a perpetual debt; one that never reduces or gets extinguished. When a lease is complete, it must be replaced with a new lease, and so on.

Therefore, no matter how many payments remain in a lease, mortgage applicants must use the full car lease payment for purposes of a mortgage approval.

By contrast, for people whom are owners of their automobiles, car payments must only be added to debt ratios if more than 10 car payments remain until the car's loan is paid-in-full. For homeowners and buyers in Marietta , this can improve debt-to-income ratios and support a higher purchase price on a home.

There is no firm rule for whether it better to lease a car or to own one. The arguments for both sides are compelling and reasonable. Start with the video, then do your own research. 

What's Ahead For Mortgage Rates This Week : August 13, 2012

Mortgage markets worsened last week as the investors moved back into risk-taking mode. Better-than-expected economic data in the U.S. plus a general feeling that the ongoing Eurozone issues will be soon be resolved (or lessened) contributed to a second straight week of rising mortgage rates.

One such data point was the weekly Initial Jobless Claims report.

According to the U.S. Department of Labor, the number of U.S. workers filing for first-time unemployment benefits unexpectedly dropped 6,000 from the week prior on a seasonally-adjusted basis. Economists had expected a week-over-week increase.

In addition, government-backed mortgage securitizers Fannie Mae and Freddie Mac both announced quarterly profits last week of a combined $8.3 billion. This, too, reflects well on the economy because both companies attributed strong results to a recovering housing market.

Conforming rates in Canton rose for the second straight week, according to Freddie Mac's weekly mortgage rate survey.

The 30-year fixed rate mortgage rate now averages 3.59% nationwide for mortgage applicants willing to pay 0.6 discount points plus a complete set of closing costs where 1 discount point is a loan fee equal to one percent of your loan size.  This is a 10 basis point increase from late-July, when rates averaged 3.49%.

The 15-year fixed rate mortgage also moved higher, registering 2.84% last week after recently posting at 2.80%, on average.

This week, there won't be much data to move markets. We'll see the release of the Producer Price Index and the Consumer Price Index -- two inflationary gauges for the U.S. economy -- as well as July's Retail Sales report. Beyond that, however, there won't be much. Therefore, be wary of day-to-day momentum in the mortgage bond market.

Between January and July, momentum took mortgage rates lower; eventually to an all-time low. Since August 1, however, that momentum has reversed.

If you're floating a mortgage rate or are otherwise not yet locked, get with your loan officer quickly. Mortgage rates may fall between today and Friday, but there's much more room for rates to rise instead.

5 States Home To 50% Of Foreclosure Activity Nationwide

Foreclosure pipelines are re-filling nationwide.

According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings dipped below 192,000 in July 2012, a 3 percent decrease from the month prior.

RealtyTrac defines a "foreclosure filing" as any foreclosure-related action, including a Notice of Default, a Scheduled Auction, or a Bank Repossession.

July marks the 22nd straight month during which foreclosure filings fell on a year-over-year basis. At some point soon, however, that streak may end. This is because, for the third straight month, on an annual basis, foreclosures starts are on the rise.

More than 98,000 homes started the foreclosure process in July, a 6 percent increase from July of last year. Connecticut, New Jersey and Pennsylvania experienced the biggest increases, rising 201%, 164% and 139%, respectively.

Each is a judicial foreclosure state, which means that foreclosures must go through the state court system prior to auction.

Nationwide, just a few states accounted for the majority of July's total foreclosure activity. 5 states were home to more than half of all tracked activity, according to RealtyTrac.

• California : 21.9 percent
• Florida : 13.3 percent
• Illinois : 7.2 percent
• Georgia : 5.7 percent
• Texas : 5.2 percent

Collectively, these 5 states represent just 33 percent of the nation's population.

In contrast to the five states above, the bottom 14 states accounted for just 1 percent of the nation's foreclosure activity, led by North Dakota. In North Dakota, just 3 foreclosure filings were made in July. Other "fewest foreclosure" states in July included District of Columbia (7 filings), Vermont (31 filings), and South Dakota (63 filings).   

For home buyers in Marietta , with more foreclosed properties expected to go for sale this year and next, there will be some excellent "deals" and discounts -- foreclosed homes typically sell at discounts of 20% or more as compared to comparable, non-distressed homes. However, foreclosed homes are often sold as-is, which means they may have defects.

Before placing a bid on a foreclosed home, therefore, make sure to have an experienced real estate agent on your side. Buying a foreclosed home may save you money at your closing, but may cost you money longer-term.

Improving Market Index Spans 32 States, District Of Columbia

80 U.S. metropolitan markets are showing "measurable and sustained growth" this month, according to the National Association of Homebuilders' Improving Market Index.

It's good news for the economy and good news for housing. 

The NAHB's Improving Market Index is meant to identify U.S. markets in expansion. It's a composite of the three distinct data sets which, as a group, present a more holistic view of a given city's growth :

1. From the Bureau of Labor Statistics, the IMI tracks employment figures
2. From Freddie Mac, the IMI tracks home price data
3. From the Census Bureau, the IMI tracks single-family building permits

The home builder trade group compiles this data and, in order for a given metropolitan area to earn the label "improving", the area must meet two specific growth conditions.

First, in a given city, each of the above data sets must show growth or expansion in the current calendar month. If one of the three do not show growth, the city cannot qualify.

Second, in a given city, at least six months must have passed since the most recent trough of all of the above metrics.  It's this second clause that can make the Improving Market Index meaningful.

By focusing on long-term growth trends within a city, the IMI ignores "blips" and seasonal irregularities. 

The August IMI shows 80 improving markets nationwide, a 4-city decrease from July 2012. 5 new cities were added to the index including Miami, Florida; Terre Haute, Indiana; and Lubbock, Texas. Nine cities fell off the list.

Overall, 32 states are represented in the IMI, and the District of Columbia, too.

For today's Atlanta home buyers, the IMI doesn't provide much actionable information. It doesn't show home prices, for example, nor the current demand for homes. What it shows is the strength of local economies, though, and in many cases, as the economy heats up, so do home prices.

The complete Improving Markets Index is available for download at the NAHB website.

Mortgage Standards Stop Tightening; Lending Soon To Loosen?

As another signal of an improving U.S. economy, the nation's biggest banks have started to loosen mortgage lending guidelines.

As reported by the Federal Reserve, last quarter, no "big banks" reported stricter mortgage standards as compared to the quarter prior and "modest fractions" of banks reported easier mortgage standards. 

The data comes from the Fed's quarterly Senior Loan Officer Survey, a questionnaire sent to 64 domestic banks and 23 U.S. branches of foreign banks. The survey is meant to gauge, among other things, direct demand for consumer loans and banks' willingness to meet this demand.

Not surprisingly, as mortgage rates fell to all-time lows last quarter, nearly all responding banks reported an increase in demand for prime residential mortgages where "prime residential mortgage" is defined as a mortgage for an applicant whose credit scores are high; whose payment history is unblemished; and, whose debt-to-income ratios are low.

Consumers were eager to buy homes and/or refinance them last quarter and 6% of the nation's big banks said their credit standards "eased somewhat" during that time frame. The remaining 94% of big banks said standards were left unchanged.

The ease of getting approved for a home loan, however, is relative.

As compared to 5 years ago, Atlanta home buyers and rate shoppers face a distinctly more challenging mortgage environment. Not only are today's minimum FICO score requirements higher by up to 100 points, depending on the loan product, applicants face new income scrutiny and must also demonstrate a more clear capacity to make repayments.

Tougher lending standards are among the reasons why the national home ownership rate is at its lowest point since 1997. It is harder to get mortgage-approved today as compared to late-last decade.

For those who apply and succeed, the reward is access to the lowest mortgage rates in a lifetime. Mortgage rates throughout Georgia continue to push home affordability to all-time highs.

If you've been shopping for a home, or planning to refinance, with mortgage rates low, it's a good time to commit. 

Closing At The End Of August? Plan Ahead For Labor Day Weekend.

Planning to make a late-August purchase closing? Keep an eye on your calendar. The last Friday of this month coincides with Labor Day Weekend, which may make for a complicated, end-of-month closing.

If you're planning to close on, or around, August 31, 2012, plan ahead. Leaving anything to the proverbial last minute could delay your closing by hours in a best-case scenario, and by days in a worst-case.

This is because Labor Day is among the most popular vacation times of the year in the real estate, title and mortgage industries and, as Labor Day approaches, it's increasingly hard to resolve "issues" related to settlement -- not all parties are readily available for resolution.

A small closing issue, therefore, can spiral into a major one when you can't reach your attorney; or, when the title company is short-staffed, for example. 

For Canton home buyers currently under contract, and for homeowners with a refinance in-process, the best defense at a time like this is a good offense. Get proactive with the mortgage process.

These steps can help your end-of-month closing go more smoothly this month :

1. Prepay your first year of homeowners insurance, effective your closing date. Provide proof of payment to your lender.
2. Document and deposit all gifts and retirement withdrawals to be used in conjunction with your closing as early in the process as possible.
3. If applicable, get Power of Attorney forms signed by all parties, and lender-approved in advance. Don't leave this for the last week.
4. When your lender makes requests for paperwork, fulfill the requests within 24 hours, when possible.

In addition, if you're a home buyer, consider scheduling your home walk-through for as early as can be reasonable. That way, if there's an issue to resolve, there's ample time to address it among all parties.

Furthermore, if you have planned vacation time between today and your closing date, make it known to all parties, and make sure to be reachable in the event of emergency by phone and/or email.

Real estate brokerages, title companies and mortgage lenders are notoriously short-staffed as Labor Day approached. Routine tasks take longer than usual. Plan ahead for August 31, therefore. It would be foolish not to.

What's Ahead For Mortgage Rates This Week : August 6, 2012

Mortgage bonds worsened last week in a news- and event-heavy week. A series of non-action from the world's central banks -- including the Federal Reserve -- plus a better-than-expected jobs report pushed mortgage rates to their highest levels in more than a month.

Conforming mortgage rates rose in Atlanta and nationwide last week.

The week wasn't without drama, however. Mortgage rates carved out a wide range.

When the week opened, mortgage markets were in a rally mode. The European Central Bank had previously said that it would do whatever was needed to preserve the European Union. However, details failed to emerge on that plan, leading to a "risk off" scenario in which investors moved money into the relative safety of bonds, a class which includes mortgage-backed securities.

Mortgage rates dropped Monday and Tuesday.

Then, Wednesday, beginning at 2:15 PM ET, mortgage rates spiked. The timing coincides with the end of the Federal Open Market Committee's scheduled 2-day meeting and its statement to the markets. In it, the Fed said it will leave the Fed Funds Rate unchanged in its target range of 0.000-0.250%, and that it will not add new stimulus to the markets or the economy.

Wall Street had expected the Federal Reserve to launch new support for bond markets and, when the Fed chose against it, bond markets sold off, sending mortgage rates higher.

Thursday, mortgage rates, once again, slipped. This occurred after the European Central Bank emerged from a meeting with no clear plan to "save the Euro". Markets believe the ECB will take some action, but because that action won't happen right away, investors once more poured into the relative safety of mortgage bonds.

Lastly, on Friday, the U.S. Non-Farm Payrolls report showed 163,000 net new jobs added in July, far exceeding analyst expectations of 100,000 net new jobs. The surprise result sent stock markets soaring and bond markets sinking. The 30-year fixed rate mortgage rose all day, and is now at its highest level in close to 6 weeks.

Freddie Mac reported the 30-year fixed rate mortgage at 3.55% last week. It's higher than that now.

This week, there isn't much economic data on which for markets to move so expect to see rhetoric and momentum take center stage. Fed Chairman Ben Bernanke makes two public appearances and Eurozone leaders will continue to be in the news.

If you're floating a mortgage rate right now, a prudent move may be to lock it.

Freddie Mac 30-Year Fixed Rate Mortgage Rates Rises To 3.55%

Mortgage rates couldn't fall forever, it seems.

This week, for the first time since mid-June, the 30-year fixed rate mortgage rate climbed on a week-over-week basis, moving 6 basis points to 3.55%, on average, nationwide.

According to Freddie Mac, 3.55 percent is the highest average rate at which the benchmark product has been offered in close to 4 weeks.

The Freddie Mac published mortgage rate is available for prime borrowers willing to pay a full set of closing costs plus an accompanying 0.7 discount points.

Discount points are a one-time, upfront mortgage loan fee to be paid at closing where 1 discount point is equal to one percent of your loan size. In this way, a Canton home buyer who pays one discount point at closing will be responsible for an additional $1,000 in closing costs per $100,000 borrowed.

However, although Freddie Mac says that the average mortgage rate is 3.55%, not everyone who applies for a conforming mortgage will get access to that rate. This is because Freddie Mac's published rates are the ones offered to "prime" borrowers, the definition of which often includes :

• Top-rated credit scores, typically 740 or higher
• Verifiable income using two year's of tax returns 
• Home equity of at least 25%

Borrowers not meeting the above criteria should expect slightly higher mortgage rates and/or discount points. In some cases, such as when an applicant's credit score is below 680, mortgage rates may be higher by as much as 0.500%.

Although mortgage rates are up this week, though, the impact on home affordability is muted. Mortgage payments rose just $3 per month per $100,000 borrowed this week as compared to last week. 3.55% remains the third-lowest Freddie Mac rate of all-time.

Mortgage rates remain unpredictable and there's no guarantee for low rates to last forever -- much less through August. If today's mortgage rates meet your needs, therefore, consider locking something in.

Simple Explanation Of The Federal Reserve Statement (August 1 , 2012)

The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent Wednesday. The vote was nearly unanimous.

Only one FOMC member, Richmond Federal Reserve President Jeffrey Lacker, dissented in the 9-1 vote.

The Fed Funds Rate has been near zero percent since December 2008. 

In its press release, the Federal Reserve noted that the U.S. economy has "decelerated somewhat" since January. Beyond the next few quarters, though, the Fed expects growth to "remain moderate" and then gradually pick up.

There was no mention of strain in global financial markets and its threat to the U.S. economy, as the Fed had made in its last two post-meeting press releases.

The Fed's statement also included the following observations about the economy :

1. Household spending is "rising at a somewhat slower pace"
2. Inflation has declined, mostly on lower oil and gas prices
3. Unemployment rates remain "elevated"

Furthermore, the Fed addressed the housing market, stating that, despite signs of improvement, the sector overall remains "depressed".

The biggest news to come out of the FOMC meeting, though, was that there was no news.

First, the Federal Reserve is leaving its "Operation Twist" program in place. Operation Twist sells shorter-term securities off the Federal Reserve's balance sheet, using the proceeds to purchase longer-term securities. This move puts "downward pressure on longer-term interest rates" and makes "broader financial conditions more accommodative."

Second, the Fed re-iterated its pledged to keep the Fed Funds Rate at "exceptionally low" levels at least through late-2014.

And, third, to Wall Street's surprise, there was no announcement of a third round of quantitative easing, a market stimulus plan by which the Federal Reserve buys U.S. treasuries and mortgage-backed bonds on the open market. QE3 would have likely led mortgage rates lower.

The FOMC's next scheduled meeting is a two-day event slated for September 12-13, 2012.

Mortgage markets are rising post-FOMC.

Case-Shiller Index Shows Home Values Rising Nationwide

According to the S&P/Case-Shiller Index, home values rose 2.2% nationwide, with all 20 tracked markets making month-to-month improvement. On an annual basis, 17 of the 20 Case-Shiller Index markets improved.

Despite the positive report, however, our enthusiasm for the May Case-Shiller Index should be tempered. This is because the index's methodology is less-than-ideal for today's Atlanta home buyer.

There are three main reasons why :

1. The Case-Shiller Index tracks values for single-family homes only
2. The Case-Shiller Index is distorted by distressed, discounted home sales 
3. The Case-Shiller Index publishes on a 2-month lag

Perhaps even more important, though, is that the Case-Shiller Index ignores a basic tenet of the housing market -- all real estate is local. It's not possible for 20 cities to represent the U.S. housing market as a whole. Even more egregious is that the 20 markets tracked by the Case-Shiller Index don't represent the country's twenty most populated cities.

The Case-Shiller Index specifically excludes home sale data from Houston, Philadelphia, San Antonio and San Jose -- four of the nation's 10 most populated cities. Yet, the index does include data from cities such as Minneapolis, Minnesota and Tampa, Florida.

These two cities rank #48 and #55, respectively.

Furthermore, in its 20 tracked cities, the Case-Shiller Index still manages to fail as a reliable housing market barometer. This is because home values vary by zip code, by neighborhood, and by street, even. All 20 Case-Shiller Index cities showed gains in May, but there remains areas within each metropolitan area in which values outpaced the Case-Shiller Index findings, and areas in which values fell short.

The Case-Shiller Index provides broad, generalized housing market data and that works for an economist. For an active home buyer or seller, though, making smart real estate decisions requires having timely, relevant real estate data at-hand when it's needed. 

For data like that, talk with a real estate agent.

Planning Ahead For The Federal Reserve's Next Move

In Washington, D.C. today, the Federal Open Market Committee (FOMC) begins a 2-day meeting, its fifth of 8 scheduled meetings this year.

Mortgage rates are expected to change upon the FOMC's adjournment. Rate shoppers and home buyers of Marietta would do well to be alert.

The Federal Open Market Committee is a rotating 12-person subcommittee within the Federal Reserve. It's the group which makes U.S. monetary policy. 

"Making monetary policy" has many meanings but the action for which the FOMC is most well-known is its setting of the Fed Funds Funds. The Fed Funds Rate is the prescribed interest rate at which banks borrow money from each other overnight.

Since late-2008, the Fed Funds Rate has been near zero percent.

The Fed Funds Rate and Freddie Mac's 30-year fixed rate mortgage rate move along different paths. Sometimes, the two converge. Other times, they diverge. They've been separated by as much as 529 basis points in the past 12 years, and they've have been as near to each other as 52 basis points.

Clearly, there's no correlation between the Fed's Fed Funds Rate and the common 30-year mortgage. However, with its words, the Federal Reserve can influence the direction in which mortgage rates move -- on occasion, by a lot.

We'll be witness to this Wednesday.

When the FOMC adjourns, it is expected to announce no change in the Fed Funds Rate. Yet, based on the verbiage of the post-meeting statement, mortgage rates will rise or fall accordingly. If the Fed notes that the economy is sagging and that new stimulus is planned, mortgage rates are expected to drop throughout Georgia. This is because new, Fed-led stimulus would be a boon for mortgage markets which would, in turn, drive mortgage rates down.

Conversely, if the Fed acknowledges growth in the U.S. economy and/or little need for new stimulus, mortgage rates are expected to rise.

Either way, expect rates to change -- we just can't know in what direction. The FOMC adjourns at 2:15 PM Wednesday.

What's Ahead For Mortgage Rates This Week : July 30, 2012

Mortgage markets booked major losses last week after European leaders spoke of their determination to preserve the European Union. Mortgage rates jumped Thursday and Friday as investors sold positions of relative safety, including bonds, and moved their money into stock markets.

Mortgage rates closed the week at a 14-day high and, if not for last week's GDP figures, conforming mortgage rates in Georgia would likely have closed even higher.

The Commerce Department said GDP slipped to +1.5% last quarter, down from +2.0% from January-March. The slowdown suggests that the U.S. economy may not meet analyst's 2012 projections, and gives the market hope that the Federal Reserve will add new stimulus at its scheduled, 2-day meeting this week.

The Fed meeting is just one of the story lines affecting mortgage rates this week. For rate shoppers in Marietta and nationwide, it will be a risky week to float a rate.

For a brief run-down of the events of the week :

• Wednesday afternoon, the Federal Open Market Committee adjourns. Wall Street believes that the economy has slowed enough to justify new market stimulus. It's unclear whether the Federal Reserve agrees. If new stimulus is added, and if the package is sufficiently large, mortgage rates should drop. Otherwise, mortgage rates should rise.
• Thursday, the European Central Bank meets, after which the ECB is expected to announce an aid package for Spain, and a general plan to hold the European Union together. If the plan is well-received by markets, mortgage rates will rise. If the plan is panned, mortgage rates will fall.
• Friday, the Bureau of Labor Statistics releases its July Non-Farm Payrolls report. Economists expect 100,000 jobs created in July. If the actual figure falls short, mortgage rates should fall.

It's important to understand that each of these three events represents major risk to rate shoppers. Mortgage rates will be volatile this week, and that volatility is expected to continue until mid-September, at minimum.

If you're shopping for a mortgage, therefore, the longer you wait to lock, the bigger your mortgage rate risk. Especially with rates at all-time lows; rates have been falling for so many weeks, there's a lot of ground to cover on the way back up. 

Pending Home Sales Index Falls Just Short Of 100

Home sales appear headed for a mid-summer breather. 

One month after posting a multi-year high, the Pending Home Sales Index retreated to 99.3 in June -- a strong reading in its own right.

A "pending home sale" is a home that is under contract to sell, but not yet sold. June's value of 99.3 marks the 14th consecutive month during which the index showed year-to-year gains.

Last year in June, the index read 90.7.

For home buyers in Atlanta and nationwide, the 14-month winning streak is one worth noting -- specifically because the Pending Home Sales Index is different from the other housing market data that tends to make headlines.

Unlike the FHFA's Home Price Index, for example; or the monthly New Home Sales data which both report on how housing performed in the past, the National Association of REALTORS®' Pending Home Sales Index looks at how housing will perform in the future.

With high correlation, the Pending Home Sales Index predicts how Existing Home Sales will perform two months hence. This is because 80% of homes under contract convert to "closed sales" within 60 days of going into contract, and many of the rest convert within Months 3 and 4.

In addition, June's near-100 reading is significant.

The Pending Home Sales Index is normalized to 100, a value which corresponds to the average home contract activity in 2001, the index’s first year of existence. 2001 was an historically-strong year for the housing market which means that June's market action was also strong.

For today's home buyers, the Pending Home Sales Index implies that the current market is somewhat "soft" as compared to May, a scenario which lends itself to buyer-friendly negotiations. Plus, with mortgage rates at all-time lows, home affordability has never been higher.

It's an opportune time to buy a home in East Cobb. By next month, the market may look different.

New Home Sales Slow After Fast Start To 2012

The number of newly-built homes sold slipped 8 percent in June from the month prior, says the U.S. Census Bureau in its latest New Home Sales report. The June data shows 350,000 homes sold nationwide on a seasonally-adjusted, annualized basis.

The home sale tally fell short of Wall Street expectations but the Census Bureau revised higher its previously-released results for March, April and May by a collective 33,000 units. This left the June New Home Sales report as the weakest of the last five months, yet still stronger than the 21 months preceding February.

In other words, despite retreating from May, the June New Home Sales data was still quite strong. As compared to June of last year, sales of newly-built homes are higher by 15% and the national inventory of new homes for sale is down to 144,000 units.

This marks a 13 percent inventory reduction in just twelve months.

At the current sales pace nationwide, the complete stock of new homes would "sell out" in 4.9 months, a noteworthy data point because analysts believe that a 6.0-month supply of homes marks a market in balance. Home supplies of below 6.0 months suggest a "seller's market" where sellers have pricing power and excess leverage in negotiations. 

Home supplies have been south of 6.0 months since October 2011. This is the same month that marked a shift with other housing data points, too, including Existing Home Sales and the Home Price Index.

Since October 2011, the average new home sale price is higher by 6% nationwide, a trend that should continue in Canton through the end of 2012 and into 2013 -- especially with mortgage rates at new all-time lows and home affordability at all-time highs. As more buyers enter the market amid limited supply, prices are expected to rise.

If you're a home buyer in search of new construction, therefore, the best new home "deals" you may find may be the ones you find today.

Home Values Rise 0.8% In May 2012

The housing market's bottom is 9 months behind us. Home values continue to climb nationwide.

According to the Federal Home Finance Agency's Home Price Index, home values rose 0.8% in May on a monthly, seasonally-adjusted basis. May's reading marks the sixth time in seven months that home values rose.

Values are now higher by 4 percent since the market's October 2011 bottom.

As a Marietta home buyer or seller, though, it's important to understand what the Home Price Index measures. Or, more specifically, what the Home Price Index doesn't measure.

Although widely-cited, the HPI remains widely-flawed, too. It should not be your sole source for real estate data.

As one example of how the Home Price Index is flawed, consider that the HPI only tracks the values of homes with an associated Fannie Mae- or Freddie Mac-backed mortgages. Homes with mortgages insured by the FHA are excluded, as are homes paid for with cash.

5 years ago, this wasn't a big deal; the FHA insured just 4 percent of the housing market and cash sales were relatively small. Today, though, the FHA is estimated to insure more than 30% of new purchases and cash sales topped 17 percent in May 2012.

That's a sizable subset of the U.S. housing market.

A second flaw in the Home Price Index is that it tracks home resales only and ignores new home sales. New home sales represent roughly 10% of the today's housing market, so that's a second sizable subset excluded from the HPI.

And, lastly, we can't forget that the Home Price Index is on a 60-day publishing delay.

It's nearly August, yet we're only now receiving home valuation data from May. A lot can change in the housing market in 60 days, and it often does. The HPI is not reporting on today's market conditions, in other words -- it's reporting on conditions as they existed two months ago. Information like that is of little use to today's buyers and sellers in East Cobb.

For local, up-to-the-minute housing market data, skip the national data. Talk with a local real estate agent instead.

Since peaking in April 2007, the FHFA's Home Price Index is off 16.0 percent.

Mortgage Rates Down 1 Percent In One Year

Another week, another new low for mortgage rates. 

According to Freddie Mac's weekly Primary Mortgage Market Survey, the 30-year fixed rate mortgage rate fell 3 basis points to 3.53% last week nationwide. The 3.53% mortgage rate is available to mortgage applicants who are willing to pay 0.7 discount points, on average, plus a full set of closing costs.

One year ago, the 30-year fixed rate mortgage rate was 4.52%. Today, it's nearly one percent lower. For every $100,000 borrowed at today's rates as compared to July 2011, a mortgage applicant will save $57 per $100,000 borrowed, or $684 per year.

Over 30 years of a loan, those savings add up.

30-year fixed rate mortgage rates have now dropped through 5 consecutive weeks, and in 11 of the last 12 weeks, a streak dating back to late-April. Depending where you live, however, you may not get access to 3.53% mortgage rates. As Freddie Mac's survey reveals, mortgage rates vary by region.

Last week, mortgage rates by region were listed as follows :

• Northeast Region : 3.56% with 0.7 discount points 
• West Region : 3.49% with 0.7 discount points
• Southeast Region : 3.58% with 0.7 discount points
• North Central Region : 3.52% with 0.7 discount points
• Southwest Region : 3.56% with 0.7 discount points

Homeowners and home buyers in California, Oregon and Washington, therefore, received the lowest rates in the country, on average. Owners and buyers in Florida and Georgia, by contrast, received the highest rates.

This week, though, mortgage rates are lower everywhere.

With Spain at risk for a sovereign default and China warning of slow growth, mortgage rates began the week by falling yet again. If you're eligible to refinance, therefore, the timing may be right to lock a mortgage rate. Similarly, if you're an active home buyer in Marietta , today's low rates will bolster your maximum purchasing power.

Talk to your loan officer about capitalizing on the lowest rates of all-time. Rates throughout Georgia may not rise beginning next week, but when they do rise, they'll likely rise quickly.

What's Ahead For Mortgage Rates This Week : July 23, 2012

Mortgage markets improved last week on expectations for new Federal Reserve stimulus, plus ongoing concerns about the European Union's future.

Mortgage-backed bonds climbed to new all-time highs, which helped conforming mortgage rates drop to new all-time lows.

The average 30-year fixed-rate mortgage rate is now 3.53% nationwide, according to government mortgage-backer Freddie Mac's weekly mortgage rate survey. The 3.53% rate is available to mortgage applicants willing to pay 0.7 discount points plus a full set of closing costs where 1 discount point is equal to 1 percent of your loan size.

The 15-year fixed-rate mortgage rate dropped last week, too, falling to 2.83% nationwide, on average.

Even as mortgage rates in Atlanta drop, however, rate shoppers should be wary of a potential rate reversal. This is because July's rapid drop in mortgage rates, mostly, has been fueled by market speculation.

First, with employment data lagging, inflation pressures low, and slower-than-expected economic growth, Wall Street now believes that the Federal Reserve will launch its third round of quantitative easing next week, a move that would likely include large-scale mortgage bond purchases.

New, Fed-led demand for mortgage bonds would lead mortgage rates lower for homeowners and rate shoppers throughout Georgia.

And, second, investors are preparing for a potential sovereign debt default in Spain, the Eurozone's fourth largest economy. The Greek economy, by contrast, which faces similar struggles, is 5 times smaller than Spain's. A Spain default, too, would likely lead U.S. mortgage rates lower.

That said, if neither event comes to pass -- if the Fed passes no new stimulus and Spain receives an ample-sized bailout -- mortgage rates would be expected to rise as Wall Street re-adjusts its expectations for the future.

The change would happen quickly, too.

This week, markets will continue to take their cues from the Fed and the Eurozone, but with an eye toward U.S. housing data. The housing market is linked to economic growth so strong results may lead mortgage rates higher.

The June New Home Sales report is released Wednesday; the June Pending Home Sales Index is released Thursday.

Existing Home Supply Ticks Higher To 6.6 Months Nationwide

Home resales slipped more than 5 percent last month, putting a damper recent housing market enthusiasm.

According to the National Association of REALTORS®, Existing Home Sales fell to 4.37 million units in June 2012 on a seasonally-adjusted, annualized basis. This is 250,000 fewer home sales per year as compared May's figures which NAR has revised 2 percentage points higher.

The pace at which homes are selling has slowed, too. As compared to May, the Existing Home Supply rose 0.2 months. At the current pace of sales nationwide, the national home supply would now be exhausted in 6.6 months.

A home supply of 6.0 months is believed to mark a market in balance. There are currently 2.39 million homes for sale nationwide -- the lowest total in 3 months and more than 24% below than the listed inventory at this point last year.

Other noteworthy statistics from the Existing Home Sales report include :

• First-time buyers accounted for 32% of all purchasers in June, down from 34% in May
• Real estate investors accounted for 19% of all purchasersin June, up from 17% in May
• Cash buyers accounted for 29% of all purchasers in June, up from 28% in May

In addition, distressed sales as a percentage of all sales was unchanged in June as foreclosures sold for an average discount of 18 percent below market value. Short sales nationwide sold at an average 15 percent discount.

More on "distressed sales" : In June, distressed homes accounted for 25% of all home resales, the smallest percentage of homes sold with such status since the real estate trade group began tracking the data in 2008.

Despite falling home sales and rising home supplies, however, home resales are expected to return to growth in July. Last month's Pending Home Sales Index spiked to a 2-year high, and 80% of homes under contract close within 60 days. This portends well for July's Existing Home Sales data, due in 4 weeks.

Low mortgage rates and rising rents in Canton and in many U.S. cities continue to fuel the U.S. housing market. Home buyers should expect higher home prices ahead.

Singe-Family Housing Starts Rise For 4th Straight Month

New construction housing is in a post-recession rally.

As reported by the Census Bureau, on a seasonally-adjusted, annualized basis, last month's Single-Family Housing Starts rose 5 percent to 539,000 units nationwide. This is the highest reading since April 2010, the last month of that year's federal home buyer tax credit.

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

June's strong numbers also mark the fourth consecutive month during which Single-Family Housing Starts have climbed. This, too, has not occurred since April 2010.

The data is yet one more signal to Marietta home buyers that today's new construction market has its worst days behind it.

Home builders think so, too.

Earlier this week, the National Association of Homebuilders released its monthly Housing Market Index, a metric which tracks homebuilder confidence. Home builders report higher sales levels and massive foot traffic as compared to just 12 months ago. They also expect second-half sales in 2012 to climb sharply.

It's no wonder that home builder confidence rose to a 5-year high. Builders are building homes and buyers are buying them.

Today's market for new homes has been spurred forward by low mortgage rates, but rising rents have played a part, too. In many parts of the country, a comparable home is less expensive to own than to rent, which creates an incentive for renters to buy homes instead.

The availability of low downpayment mortgage programs via the FHA and other government agencies helps as well.

It's a good time to be home buyer. Mortgage rates are at all-time records, home prices remain low nationwide, and the real estate market is believed to be entering the beginning of a sustained, multi-year recovery.  

If you're undecided about whether now is a good time to buy a new home, speak with your real estate agent. The cost of home ownership may never be as low as it is today.

Homebuilder Confidence Doubles In 12 Months

Homebuilder confidence is soaring.

For the second time in three months, the National Association of Homebuilders reports that the Housing Market Index made sizable gains. 

The Housing Market Index measures homebuilder confidence in the new construction market and is scored between 1-100. Readings above 50 indicate favorable conditions in the single-family new home market. Readings below 50 indicate poor conditions.

The Housing Market Index leaped to 35 in July, a 6-point improvement and the index's biggest one-month gain since September 2002.

The HMI is now up 14 points this year and is more than double its value of one year ago.

The Housing Market Index itself is a composite of three separate survey questions sent to NAHB members monthly. The questions are basic :

1. How are market conditions for the sale of new homes today?
2. How are market conditions for the sale of new homes in 6 months?
3. How is prospective buyer foot traffic?

For July 2012, home builders reported huge gains. Current home sales are up 6 points; sales expectations for the next six months are up 11 points; and buyer foot traffic is up 6 points.

All three survey answers made 5-year highs. Not since 2007 has sales volume and foot traffic been as strong, and over the next 6 months, builders expect a blow-out finish to the year.

It's no surprise, either.

Low mortgage rates throughout Georgia have lowered monthly housing payments to levels below monthly rent for a comparable home. Plus, programs such as the FHA 3.5% downpayment program continue to help first-time buyers get in homes.

There is a downside to rising homebuilder confidence, however. When builders feel more comfortable about their business and the prospects for the future, they're less likely to make sales concessions to to offer free upgrades. If you're shopping for new construction, therefore, consider moving up your time frame.

Home affordability remains historically high today. It may not be so tomorrow.

Foreclosure Starts Rise For Second Straight Month

The number of U.S. homes receiving foreclosure notices topped one million through the first six months of 2012, according to RealtyTrac.

There were 1.046 million foreclosure filings between January - June 2012, says the foreclosure-tracking firm in its Midyear 2012 Foreclosure Market Report. The tally represents a 2 percent increase from the immediate six months prior.

A "foreclosure filing" includes all of the following foreclosure-related actions : (1) Default notices, (2) Scheduled auctions, and (3) Bank repossessions. 

One notable fact from within the report is that, even as the number of repossessed homes dropped nationwide, the number of homeowners receiving a Notice of Default or lis pendens rose. These notices are the first step in the foreclosure process which means that we should expect the national foreclosure pipeline to fill later this year.

It's no coincidence that foreclosure starts are rising now, either.

Earlier this year, a $25 billion mortgage servicing settlement provided banks with the necessary framework and rules by which they can foreclose upon a home. Prior to the this settlement, fearing legal liability, some banks chose to slow -- or halt -- foreclosure starts entirely. Since the settlement's announcement, though, foreclosure activity has resumed.

For today's Canton home buyers, the foreclosure market represents an interesting opportunity. Homes purchased while in the various stages of foreclosure can often be purchased for a lower price than homes which are not in foreclosure; one reason why foreclosed homes account for 25 percent of all home resales. 

However, be careful that you don't confuse "less expensive" with "less costly".

Foreclosed homes are often sold as-is and may be in various stages of disrepair at the time of purchase. Spending money to repair a foreclosed home in order to make it habitable could wipe out the money saved on its sales price. Your best real estate "deal", therefore, may be a non-distressed home in sound, move-in ready condition.

If you're buying foreclosures -- or even considering it -- be sure to talk with a real estate agent. The process of buying a foreclosed property is different from buying a "regular" home. You'll want somebody experienced on your team.

What's Ahead For Mortgage Rates This Week : July 16, 2012

Mortgage markets improved last week on slowing economic growth worldwide and investor thirst for "safe" investments.

China's economy posted to its weakest growth since 2009 and economic activity in the Eurozone continued to sag. Both events resulted in a broad-based sell-off of equities and non-U.S. bonds. Mortgage bonds benefited from last week's flight-to-quality as bond pricing moved higher.

When mortgage bond prices rise, mortgage rates fall.

According to Freddie Mac, the average 30-year fixed rate mortgage rate is now down to 3.56% nationwide for borrowers willing to pay 0.7 discount points plus a full set of closing costs. The 15-year fixed rate mortgage fell to 2.86%, on average.

Both mortgage rates are all-time records, rewarding today's Canton home buyers and mortgage rate shoppers. The principal + interest mortgage payment on a $200,000 mortgage is now just $904.80 per month.

Low rates may not last forever.

One reason why low rates may not last is that, also last week, the Federal Reserve released the minutes from its June 2012 meeting. In it, the Fed appeared more ready to add new market stimulus than Wall Street had expected. The market's initial reaction was to push mortgage rates higher because new stimulus would encourage risk-taking among traders, and invite inflation.

This week will see the release of a number of key data points for the U.S. economy :

• Monday : Retail Sales
• Tuesday : Consumer Price Index
• Wednesday : Housing Starts
• Thursday : Existing Home Sales; Initial Jobless Claims

If any of these reports show better-than-expected results, mortgage rates are expected to rise. In addition, Federal Reserve Chairman Ben Bernanke begins a 2-day congressional testimony beginning Tuesday. The chairman's words can move mortgage markets.

Mortgage rates remain at historical loans. If you have not yet locked a mortgage rate, talk to your loan officer soon.

Revisiting Housing Market Predictions For 2012

When the calendar flips to a new year, analysts and economists like to make predictions for the year ahead.

So, today, with the year half-complete, it's an opportune time to check back to see how the experts' predictions are faring (so far).

If you'll remember, when 2011 closed, the housing market was showing its first signs of a reboot. Home sales were strong, home supplies were nearing bull market levels, and buyer activity was strong.

Homebuilder confidence was at its highest point in 2 years and single-family housing starts had made its biggest one-month gain since 2009. 

In addition, 30-year fixed rate mortgage rates had just broke below the 4 percent barrier and looked poised to stay there.

There was a lot about which to be optimistic in January 2012.

Yet, there were obstacles for the economy. The Eurozone's sovereign debt issues remained in limbo, oil prices were spiking, and the Unemployment Rate remained high -- three credible threats to growth.

At the time, analyst predictions for the economy occupied both ends of the spectrum, and everywhere in between.

Freddie Mac said home prices would rise in 2012, for example, whereas analysts at CBS News said they'd fall. Both made good arguments.

As another example, American Banker said mortgage rates would rise in 2012. The LA Times, however, said just the opposite. And, the problem with these predictions is that each party can make such a sound defense of their respective positions that it's easy to forget that a prediction is really just an opinion.

Nobody can know what the future holds.

A lot has changed since those predictions were made :

• Job growth slowed sharply after a strong Q1 2012 
• Oil costs dropped rapidly beginning in early-May
• Spain and Italy have joined Greece as potential sovereign debt trouble-zones

Now, none of this was known -- or expected -- at the start of the year yet each has made a material change in the direction of both the housing and mortgage markets.

Today, home prices remain low and 30-year fixed rate mortgage rates now average 3.56% nationwide. Home affordability is higher than it's been at any time in recorded history and, at least for now, low downpayment mortgage products remain readily available.

The experts never saw it coming.

6 months from now, the markets may be different. We can't know for sure. All we can know is that today is great time to be a home buyer in Atlanta. Home prices and mortgage rates are favorable.

Fed Minutes Suggest Fiscal Stimulus Later This Year

The Federal Reserve released the minutes from its June Federal Open Market Committee meeting, revealing a Fed divided on the future of the U.S. economy. Mortgage rates are higher after the release of the minutes.

The Fed Minutes is the detailed recap of an FOMC meeting. It is the companion piece to the more brief, more well-known post-meeting FOMC press release.

For a comparison, whereas the Fed's June 20, 2012 press release contained 5 paragraphs and 490 words, the same meeting's minutes contain 62 paragraphs and 7,508 words. The extra detail afforded by the extra words Wall Street gives insight into the nation's central banker.

The June Fed Minutes, for example, suggest that the Fed may soon add new economic stimulus. 

Recent data suggests that the U.S. economy is expanding, but more slowly that it was at the start of the year. The Fed acknowledged that this, in part, is the result of "below-trend" growth in Euro-area economies, plus a general slowdown in China.

The Fed also said that "strains in global financial markets" continue to pose "significant downside risks" to the U.S. economy. The Fed expects U.S. growth to "moderate over coming quarters".

Other notes from with the Fed Minutes included : 

• On housing : Home sales, construction and prices suggest improvement
• On inflation : Prices are stable, and inflation will remain "subdued" through 2014
• On new policy : Rapid fiscal tightening poses a "downside risk" to the economy

In addition, there was discussion about whether the Fed is missing its dual mandate of low inflation and low unemployment. Several Fed member discussed the need for new stimulus to raise employment and to raise the rate of inflation. This action could occur as soon as next month.

If the stimulus was enacted, mortgage rates would likely rise because inflation, in general, is a threat to low mortgage rates.

The next Federal Open Market Committee meeting is a 2-day affair scheduled for July 31-August 1, 2012. 

84 U.S. Markets Improving In July

Where economic growth goes, housing growth often follows.

That's why it's good news for homeowners that 84 U.S. metropolitan areas are showing "measurable and sustained growth" this month, according to the National Association of Homebuilders' Improving Market Index.

The Improving Market Index is a derivative report, based on the results of three separate data series which examine a city's local economy.

The data series used in the IMI are :

1. Employment data from the Bureau of Labor Statistics
2. Home price data from Freddie Mac
3. One-unit building permits from the Census Bureau

The NAHB compiles this data monthly, assigning a given metropolitan area the label "improving" if the following two conditions are met. First, all three data series above must show growth or expansion in the current month.

Second, at least six months must have passed since any of the above that area's most recent economic "bottom".

Because of this second clause, the IMI is focused on long-term trends in city growth, singling out only those markets in which sustained economic growth is occurring. The six-month requirement causes "blips" of growth remain ignored, and uncounted. 

The July IMI showed 84 improving markets nationwide, a 4-city increase over June 2012. 11 new cities were added to the index including Jackson, Michigan; Springfield, Massachusetts; and, Houston, Texas. Seven cities fell off the list.

32 states are represented in this month's IMI, and the District of Columbia, too.

For Georgia home buyers, there isn't much actionable information in the Improving Market Index. We don't see how many homes were sold in the month prior, for example. Nor do we see how quickly homes are selling in a particular ZIP code. But what the IMI can provide is a broad look at whether a local economy has found its footing. 

When economies are strong, it can create competition for homes which can drive up home sales prices. 

The complete Improving Markets Index is available for download at the NAHB website. But, for a better feel of what's happening in Canton on a local level, talk to a real estate agent.

Home Purchasing Power Jumps To New Highs

With mortgage rates down to all-time lows, you can buy a lot more home for your money. Home affordability is at an all-time high.

According to last week's Freddie Mac mortgage rate survey, the average 30-year fixed rate mortgage has dropped to 3.62% nationwide. This is down from 4.08% in March, and down from 4.60% from one year ago.

Mortgage rates are "on sale".

Falling mortgage rates can make one of two changes to the way a Atlanta home buyer looks at properties. They can either make a given home's monthly housing payment that much more affordable to a buyer, or they can expand that buyer's home purchasing power to a higher, maximum price point.

Since July 2011, that maximum price point increase has been significant.

Assuming a principal + interest payment of $1,000 per month and a 30-year loan term, a category that includes 30-year fixed rate mortgages and most adjustable-rate mortgages, here's a maximum loan size comparison of the last 12 months : 

• July 2011 : A payment of $1,000 affords a maximum loan size of $197,130
• July 2012 : A payment of $1,000 affords a maximum loan size of $219,409

With an increase in maximum loan size of more than $22,000 in just 12 months, it's no wonder that multiple-offer situations are becoming more common -- today's buyers know that low home prices and low mortgage rates are combining to make home buying more affordable than at any time in recent history.

However, the buyer-friendly environment can't last forever.

First, home prices have started to rise nationwide. Demand for homes has outpaced home supply in many U.S. markets and that leads home prices higher. Second, low mortgage rates can't last forever.

A recovering economy will lift mortgage rates back above 4 percent, a scenario that will hit home affordability hard.

Home-buying conditions are optimal this season. If you're in the market for a new home, talk to your real estate agent and loan officer about maximizing your home purchasing power.

What's Ahead For Mortgage Rates This Week : July 9, 2012

Mortgage markets improved last week as concerns for U.S. economic growth wrestled attention away, albeit temporarily, from the Eurozone. Mortgage bonds improved to record prices, lowering mortgage rates across Georgia and nationwide.

The biggest news of last week's holiday-shortened trading week was the Friday release of last month's Non-Farm Payrolls report.

In it, the Bureau of Labor Statistics showed that the economy added 80,000 net new jobs in June, and that the initial tallies for April and May were overstated by a combined two thousand jobs. Wall Street had expected to see at least 100,000 jobs created in June.

When the actual number of jobs fell short of expectations, stock markets sold off and bond markets gained.

According to Freddie Mac, last week's 30-year fixed rate mortgage rate averaged 3.62% nationwide for borrowers with conforming mortgages willing to pay 0.8 discount points at closing, plus a full set of closing costs.

For every $100,000 borrowed on a 30-year fixed rate mortgage, you'll pay just $456 per month -- the lowest in history.

15-year fixed rate mortgages averaged 2.89% with 0.7 discount points.

Both products set record-low mortgage rates, based on Freddie Mac's data. However, by the week's end, after the jobs report, both rates had moved lower still to the benefit of Marietta home buyers and rate shoppers. 

This week, with little new economic data set for release, mortgage markets are expected to turn attention back to Europe. Early Monday, Greece's new government won a key confidence vote in Parliament which ends a period of uncertainty during which the nation-state was without a clear leader.

This is one step toward resolving the debt issues that have plagued Greece but not the last step. How markets respond to Greece's next actions will, in part, shape the direction of mortgage rates here in the United States. With optimism, mortgage rates will rise.

Should Greece falter, mortgage rates will fall.

Mortgage rates are expected to remain volatile for at least the next 3 weeks. If you're floating a mortgage rate or wondering whether it's time to lock a rate with your lender, consider locking in. With mortgage rates at 3.62% on average, rates have much more room to rise than to fall. 

30-Year Fixed Rate Mortgage Rates Fall To 3.62% Nationwide

30-year fixed rate mortgage rates made new, all-time lows once again this week.

According to Freddie Mac's weekly mortgage rate survey of more than 125 banks nationwide, the average 30-year fixed rate mortgage rate fell 4 basis point to 3.62% nationwide.

The rate is available to conforming, prime borrowers willing to pay an accompanying 0.8 discount points plus a full set of closing costs. A "prime" mortgage applicant typically has excellent credit, verifiable income, and at least 25% equity in their home.

And, it's not just the 30-year fixed rate mortgage that made new lows in this holiday-shortened week, either. The 15-year fixed rate mortgage did, too, falling 5 basis points to 2.89%, on average.

The 15-year fixed rate mortgage requires 0.7 discount points plus closing costs.

Discount points are a one-time, up-front closing cost, based on loan size. If your loan requires 1 discount point, that means that your loan has a closing cost equal to 1 percent of your loan size. If your loan requires two discount points, the fee would be equal to two percent of your loan size; and so on.

So, based on this week's Freddie Mac survey, a home buyer in Canton opening a $200,000 mortgage and paying 0.8 discount points would face to a one-time $1,600 fee to be paid at closing.

The good news is that discount points are optional. 

To avoid paying discount points, simply ask your lender for a "zero points" loan. You'll get a higher mortgage rate than what Freddie Mac shows in its survey, but you'll pay fewer closing costs.

Today's low rates are terrific for both home buyers throughout Georgia and existing homeowners looking to make a refinance. As compared last year at this time, mortgage rates are down by 98 basis points -- nearly one full percentage point.

Mortgage payments are much lower today as compared to July 2011 : 

• July 2011 : $512.64 principal + interest per $100,000 borrowed
• July 2012 : $455.77 principal + interest per $100,000 borrowed

Today's rates yield an 11 percent payment discount as compared to last year.

Mortgage rates are unpredictable so there's no guarantee that low rates will last forever, much less through the summer. If today's rates meet your household budget, consider locking something in.

Mortgage Rate Risk Ahead Of Friday Morning's Jobs Report

Friday morning, the Bureau of Labor Statistics will release its Non-Farm Payrolls report. More commonly called "the jobs report", Non-Farm Payrolls is a monthly market-mover.

Depending on the strength -- or weakness -- of the data, mortgage rates will change. Perhaps sharply. Unfortunately, we can't know in which direction.

If you're actively shopping for a mortgage in Atlanta , therefore, today may be a prudent day to lock a mortgage.

The job report's connection to mortgage rates is straight-forward. As the number of U.S. citizens earning paychecks increases, reverberations are felt through the economy.

First, higher levels of income are tied to higher levels of consumer spending and consumer spending accounts for the majority of the U.S. economy. More working citizens, therefore, builds a larger overall economic base.

Next, as the overall economic base grows, businesses produce and sell more goods, necessitating the hiring of additional personnel and the purchase of more raw materials -- both positives for the economy.

And, lastly, as more paychecks are written, more taxes are paid to local, state and federal governments. These taxes are often used to fund projects and purchase goods and services which, in turn, grow the economy as well.

Tying it all together, the health of the U.S. economy is a major factor is setting day-to-day mortgage rates across Georgia. This is why rate shoppers face risk with tomorrow's Non-Farm Payrolls report.

Between 2008 and 2009, the economy shed 7 million jobs. It has since recovered 3.9 million of them and, Friday, analysts expect to see another 100,000 jobs created in June. If the actual number of jobs created exceeds this estimate, look for mortgage rates to rise. 

If the actual number of jobs created falls short of 100,000, mortgage rates may fall.

The government releases Non-Farm Payrolls data at 8:30 AM ET Friday.

Pending Home Sales Index Hits A 2-Year High

Homes are going under contract at a quickening pace.

In May, for the second time in 3 months, the Pending Home Sales Index crossed the 100 barrier, stretching to 101.1. A "pending home sale" is a home under contract to sell, but not yet sold.

Statistically, the Pending Home Sales Index reading is significant for two reasons.

First, the index's reading is at its highest since April 2010. From this, we infer that today's pace of home buying in Georgia and nationwide is approaching the "stimulated" levels of two years ago -- but without the federal stimulus.

This is a positive signal for the housing market.

Second, because the Pending Home Sales Index is a relative index; and, because it was assigned a value of 100 upon its inception in 2001, readings higher than 100 imply that the housing market is performing better than it did during the index's first year.

2001 happened to be a strong year for housing. 2012, it seems, is shaping up to be a better one.

And, there's another reason why the Pending Home Sales Index matters so much to buyer and sellers of Atlanta -- the Pending Home Sales Index is among the few "forward-looking" housing market indicators.

Rather than report on how the housing market looked 30-60 days in the past, as the Case-Shiller Index does; or the Existing Home Sales report, the Pending Home Sales Index looks 30-60 days to the future.

80% of homes under contract sell within 2 months so, as the Pending Home Sales Index goes, so goes housing. Based on May's data, therefore, we can assume that home sale figures will rise through the summer.

If you're shopping for homes right now, consider going under contract while the market remains somewhat soft. Mortgage rates are low and so are home prices. It makes for good home-buying conditions.

What's Ahead For Mortgage Rates This Week : July 2, 2012

Mortgage markets improved only slightly last week despite a large 2-day rally that lasted through Wednesday and Thursday.

Unfortunately for mortgage rate shoppers in Canton , markets were worse throughout the other 3 days of the week, which kept mortgage rates from dropping to new all-time lows. 

As with many weeks since the start of the year, political and economic action within the Eurozone dictated the direction of domestic mortgage rates. Last week's 2-day EU Summit was the major driver of markets. 

In the days leading up to the summit, mortgage rates worsened as optimism in summit's outcome grew. This is because a stable Europe is good for the world's economy which, in turn, encourages Wall Street investors to move money from "safe investments" such as U.S. mortgage bonds into more risky ones such as equities.

This creates an excess supply of mortgage bonds which causes mortgage rates to move higher.

Then, on the day prior to the summit, the optimism faded. Several Eurozone leaders expressed an unwillingness to compromise, rhetoric which drove investors back into "safe" asset classes, explaining the mid-week drop in mortgage rates.

However, Friday, in a surprise move, EU officials announced a plan to recapitalize Europe's banks and to reduce borrowing costs for Spain and Italy, once again, pushing investors back into a risk-taking mood.

The news in Europe overshadowed strong housing reports here in the United States.

New Home Sales and the Pending Home Sales Index both gave strong results and inflationary pressures were shown to be in check. The housing market continues its slow, steady recovery.

This week, mortgage rates are expected to remain volatile. The markets have had the weekend to pick through the EU agreement and, later this week, the Bureau of Labor Statistics will release the June 2012 Non-Farm Payrolls report. In addition, this is a holiday week so trading volume is expected to be lighter-than-usual.

Mortgage markets will be closed Wednesday.

FHFA : Home Values Up 3% Since Last Year

The Federal Home Finance Agency's Home Price Index shows home values up 0.8% in April on a monthly, seasonally-adjusted basis.

April marks the third consecutive month during which home values increased and the index is now up 3 percent from last year at this time.

As a home buyer in Atlanta , it's easy to look at the Home Price Index and believe that its recent, sustained climb is proof of a broader housing market recovery. Ultimately, that may prove true. However, we cannot base our buy-or-sell decisions on the HPI because, like the private-sector Case-Shiller Index, the Home Price Index is flawed.

There are three main flaws in the FHFA's Home Price Index. They cannot be ignored.

First, the FHFA Home Price Index's sample set is limited to homes with mortgages backed by Fannie Mae or Freddie Mac. By definition, therefore, the index excludes homes with mortgages insured by the FHA.

5 years ago, this wasn't such an issue because the FHA insured just 4 percent of mortgage. Today, however, the FHA's market share is estimated to exceed 30 percent.  This means this the HPI excludes more than 30% of U.S. homes from its calculations right from the start.

The index also excludes homes backed by the VA; jumbo mortgages not securitized through the government; and, portfolio loans held by individual banks.

Second, the FHFA Home Price Index is based on the change in price of a home on consecutive home sales. Therefore, it's sample set cannot include sales of new home sales, nor can it account for purchases made with cash because cash purchases require no mortgage.

Cash purchases were 29% of the home resale market in April.

Third, the Home Price Index is on a 60-day delay.

The report that home values are up 0.8% accounts for homes that closed two months ago, and with contracts from 30-75 days prior to that. In other words, the Home Price Index is measuring housing market activity from as far back as January. 

Reports such as the Home Price Index are helpful in spotting long-term trends in housing but data from January is of little help to today's Georgia home buyers and sellers. It's real-time data that matters most and the best place to get real-time housing market data isn't from a national home valuation report -- it's from a local real estate agent.

Simple Real Estate Definitions : Right To Cancel

As part of the federal Truth-in-Lending Act, refinancing homeowners are granted a 3-day "cooling off" period post-closing during which they retain the right to rescind, or "cancel", their recent refinance without penalty or cost.

The Right To Cancel is protection against surprises at closing and/or a change of heart. It's also a safety valve for homeowners signing paperwork under duress. With 3 days to revisit and rethink the terms of a loan, a homeowner can maintain tighter control of his/her financial situation. 

If you ever have the wish (or need) to execute your right to rescind, be aware that the process is a formal one. The required steps must be completed on-time, and in order, or else your request will be invalid.

The process starts with a document labeled "Right To Cancel". It's included in your closing package and lists the terms of a rescission in straight-forward language. Among the key points :

1. You have 3 business days during which to cancel your loan
2. When you cancel the refinance, the entire transaction is cancelled
3. You must submit your Right To Cancel in writing

"Business day" is defined by the government to be every day, save for Sundays and federal holidays. A loan that closes on a Monday, therefore, must be rescinded prior to Friday at 12:00 AM.

Typically, rescission requests are faxed to the settlement agent, notary, or title company assigned with the refinance. It's good practice to ask for an acknowledgement of receipt as proof of delivery, too.

There are some refinances for which the Right to Cancel does not apply, however. This includes refinances linked to an investment property, and loans not collateralized by residential real estate. There are other conditions, too, that may supersede your right to rescind so be sure to ask your lender.

New Home Sales Rise To 2-Year High

The new construction market continues to improve.

As reported by the Census Bureau, 369,000 new homes were sold last month on a seasonally-adjusted, annualized basis. A "new home" is a home that is considered new construction.

May's data marks the highest number of new homes sold since April 2010, the last month of that year's federal home buyer tax credit.

It's also a 14% increase over the rolling 12-month average.

The news was somewhat expected based on the most recent Homebuilder Confidence survey, which rose to a 5-year high. Home builders have been reporting higher sales volume and rising buyer foot traffic since October of last year. 

The May New Home Sales report confirms what builders already told us.

Furthermore, new homes are selling more quickly than builders have built them, lowering the national "home supply" to levels not seen since October 2005. There are currently 145,000 new homes for sale.

A supply of 6.0 months is believed to represent a market in balance. Anything less connotes a "sellers' market". At the current pace of sales, the entire new home housing stock would be exhausted in 4.7 months.

The South Region continues to account for the majority of new construction sales, posting a 55% market share in May. South Region sales were up 13 percent as compared to April. The other 3 regions turned in mixed results :

• Northeast Region : +36.7% from April 2012
• Midwest Region : -10.6% from April 2012
• West Region : -3.5% from April 2012

For all its strength, though, the Census Bureau's New Home Sales data may also be "off".

Although New Home Sales were said to rise by roughly 8 percent nationally from April to May, the government's monthly report was also footnoted with a ±12.2% margin of error. This means that the actual New Home Sales reading may have been as high as +20% last month, or as low as -4%. The values could be positive or negative -- we can't know for certain.

However, that's not to say that the New Home Sales should be ignored.

Longer-term, new home trends have been positive and builder confidence survey suggests the same.  If you're in the market for new construction in Canton , you may want to go into contract soon. Home prices and mortgage rates remain low -- a terrific combination for today's home buyers.

Existing Home Sales Slip 2% In May

Home resales slipped last month; a slight setback for the nation's housing market's recovery.

According to the National Association of REALTORS®, Existing Home Sales fell to 4.55 million units in May 2012 on a seasonally-adjusted annualized basis, representing a 2 percent drop from April.

An "existing home" is a home that's been previously owned or occupied, and cannot be categorized as new construction.

Despite May's retreat, however, as compared to last year at this time, Existing Home Sales by units are higher by 10 percent. In other words, like everything else in housing, the long-term statistical trend has been a positive one.

The housing market has seen its bottom and is finding balance.

Other data from the Existing Home Sales report includes :

• First-time buyers accounted for 34% of all purchasers, down from 35% in April
• Real estate investors accounted for 17% of all purchasers, down from 20% in April
• Cash buyers accounted for 28% of all purchasers, down from 29% in April

In addition, distressed sales accounted for 25% of all sales in May, down from 28% in April.

"Distressed sales" include the sale of homes in various stages of foreclosure, and of short sales. This is the smallest percentage of homes sold in a "distressed" status since the real estate trade group began tracking the data in 2008. 

And, lastly, home supplies rose by 0.1 months to 6.6 months nationwide in May. This means that, at the current pace of sales, the complete U.S. home resale inventory would be sold out before the end of 2012.  A 6-month supply is widely believed to represent a market in balance between buyers and sellers.

There are now 2.49 million homes for sale -- a 20% reduction from May 2011.

Home resales may have slipped last months but volume remains brisk nationwide. All-time low mortgage rates and high home affordability are keeping buyers in the market. Home prices are rising in many U.S. cities as the housing market continues its slow, steady recovery. 

What's Ahead For Mortgage Rates This Week : June 25, 2012

Mortgage markets worsened last week as Greece tentatively formed a government and the Federal Reserve extended its Operation Twist program by $267 billion.

Neither event, however, removed the uncertainty surrounding global markets.

First, Greece must still adhere to stringent austerity measures in order to meet the terms of its IMF bailout. Its new government, however, may seek to revise the terms of its fiscal austerity, a move that would keep the nation-state -- and the European Union -- in fragile balance.

As Greece comes closer to resolution, U.S. mortgage rates are likely to rise. This is because economic uncertainty in Greece has helped to keep mortgage rates down since 2010. A reversal in policy would cause mortgage rates to reverse higher.

Second, it's clear that Wall Street expected more from the Federal Reserve.

The nation's central banker made moves to pressure long-term rates lower last week, but did little else to prop up an economy it believes will grow only "very gradually" over the next few quarters. Stock markets got a gentle boost from the Fed's new stimulus, and mortgage rates suffered only slightly.

Overall, conforming mortgage rates in Georgia rose slightly last week, and much of the action occurred after Freddie Mac's weekly mortgage rate survey concluded Tuesday afternoon.

According to the government-backed mortgage-securitizer, 30-year fixed rate mortgage rates fell 5 basis points to 3.66% nationwide, on average last week. This was the lowest recorded 30-year fixed rate mortgage rate on record as this year's Refinance Boom continues.

The 15-year fixed rate mortgage rate also dropped, stopping at 2.95%, on average. This is 0.01 higher than the benchmark rate's all-time low -- a record set two weeks ago.

Buyers and would-be refinancers trying to lock a rate this morning may find pricing to be slightly worse.

This week, mortgage markets will continue to take cues from Europe, and from a bevy of U.S. economic data including the New Home Sales report and the release of the Pending Home Sales Index.

Mortgage rates remain near all-time lows. If you're considering a home purchase or refinance, the timing looks good.