Poor indoor air quality is linked to Sick Building Syndrome, a combination of ailments with more than 50 seemingly separate and unrelated symptoms, including:
Dizziness and nausea
Headache
Symptoms related to Irritable Bowel Syndrome
Personality changes
Avoiding sickness like this -- as explained by The Today Show -- may be as simple as choosing the right paint for your home.
Most "standard" paints come loaded with chemicals called VOCs -- volatile organic compounds. The naturally-occuring chemicals are added to the paint to help it spread better and last longer. Unfortunately, these same chemicals are damaging to soil and groundwater, react with sunlight to form dangerous ozone, and contribute to global warming.
There is a safer choice.
Non-VOC household paints are widely available for about the same cost as their toxic cousins. They're eco-friendly and, because recent advances in the manufacturing technology, the paint quality is outstanding.
As part of the Economic Stimulus Act of 2008, Congress authorized a conforming loan limit increase in "high-cost" areas around the country. Versus the national conforming loan limit of $417,000, for example, a Manhattan home buyer could secure a 2008 mortgage for $725,000 and still be within "conforming" guidelines.
Effective January 1, however, those limits rolled back. Conforming mortgages in the 59 designated high-cost regions are now capped at $625,500.
Loans in excess of these dollar amounts are often called "jumbo", or "super jumbo" home loans, depending on their size. Jumbo home loans tend to be more costly than their conforming-sized cousins.
Posted by Bring the Blog on January 02, 2009 | Comments (0)
For its last move in an action-filled year, the Federal Reserve announced it will begin buying its pledged $500 billion in mortgage-backed securities next month.
For home buyers, the timing couldn't be better.
Because December 31 is one of Wall Street's most thinly-traded days of the year, low volume is exaggerating the announcement's impact on mortgage markets.
Mortgage rates are lower this morning.
However, you may not have much time to act. Few mortgage lenders permit after-hours rate locking and bond markets close at 2:00 PM ET for the holiday. If you miss today's Fed-fueled low rates, markets re-open Friday for your second chance.
Posted by Bring the Blog on December 31, 2008 | Comments (0)
Mortgage markets are like any other market -- in order for goods to change hands, a buyer and a seller must first reach an agreement to "trade" at a specific price point.
In general, the more buyers and sellers there are for a particular item, the easier it is to find that "fair value" and make the deal.
An abundant number of buyers and sellers often creates a liquid market in which assets -- in this case, mortgage bonds -- can be sold rapidly with minimal loss.
This week, though -- with so many traders on vacation -- the "liquid market" has gone illiquid. The treasury market posted just 41 percent of its normal, daily volume Monday, leading to erratic pricing in the mortgage bond market which, in turn, caused mortgage rates to follow.
For example, mortgage rates started the day lower yesterday before sprinting higher over a 30-minute, early-afternoon span. Markets were largely unprovoked by economic data, geopolitical developments, or technical factors. It just, kind of, "happened" and the move left mortgage rate shoppers in the dust.
That could happen a lot this week. So, if you're in the market for a mortgage, be ready to lock quickly. With low liquidity, rates rarely sit still for long.
Grease should never be poured down a kitchen drain. The moment that liquid fat touches cold water or cold pipes, it can harden and block pipes.
Traditionally, disposing of grease required:
Pouring the grease into a glass jar
Placing the jar in the refrigerator
Throwing out the jar once the grease had hardened
However, a new, biodegradable product called Absorb-Ease lets you go from Grill to Garbage in one easy step -- with no spilled grease and no collecting of glass jars.
Just put an FDA-approved Absorb-Ease pad in a hot, greasy skillet and watch it absorb liquid like a paper towel absorbs a spill. The analogy is fitting, in fact, because Absorb-Ease is made from food-grade, fibrous tree pulp -- much like paper towel.
Grease-soaked Absorb-Ease pads can be thrown out with the rest of the garbage and can be bought online in packs of 64. They cost roughly $0.27 each.
Posted by Bring the Blog on December 29, 2008 | Comments (0)
With home prices falling across most parts of the country, investors in real estate are finding good value in certain rental properties. Unfortunately, they're also finding it harder to get approved for a home loan.
After getting stung by defaults, conforming mortgage standards for non-owner occupied home loans tightened dramatically last quarter.
One major change was the reduction in the total number of homes Fannie Mae or Freddie Mac will finance for any one borrower.
Prior to the chance, the number of financed properties could be as high as 10. Today, that number is 4, stinging investors with large real estate portfolios. Going forward, buying properties isn't the problem; financing them with conforming mortgage money is.
Another guideline change mandates larger downpayments.
Versus early-2008, when a real estate investor could buy a home with 10 percent down, today's investor is required to pay 15. But, as an added wrinkle, few private mortgage insurers write policies against rental homes anymore, rendering the 15 percent downpayment insufficient. The de facto requirement, therefore, is now 20 percent down.
And then came the fees.
As part of its "pay-for-risk" pricing model, Fannie Mae added mandatory fees to all of its investor property mortgages this year. Based on loan-to-value, the fees are:
75% LTV or less: 1.750 percent of the borrowed amount
75.01 - 80.00% LTV : 3.000 percent of the borrowed amount
Greater than 80% LTV : 3.750 percent of the borrowed amount
So, if your personal plan includes the purchase of investment properties in 2009, consider the impact that tighter conforming guidelines, larger downpayments and higher fees will have on your bottom line.
All things considered, now may be a good time to make that rental property bid. Sure, prices may fall going forward, but increased acquisition costs may wipe out the long-term gains.
Posted by Bring the Blog on December 26, 2008 | Comments (0)
For the first time in over a year, the sales of "used homes" fell below the 5-million unit trendline, helping to push the total home inventory higher by 0.1 percent nationwide.
Based on the rate at which homes are selling nationwide, it would take 11.2 months for the existing housing supply to be exhausted.
For home buyers, this is an opportune time for negative news on housing.
First, sellers know that between now and the Super Bowl, housing activity will be light. The general scarcity of buyers may force a seller to accept a bid he wouldn't have accepted otherwise.
Second, the economy is showing weakness and that, too, can concern a home seller. Buyers are less likely to extend themselves during times of economic uncertainty, further reducing the buyer pool and, again, putting pressure on the seller to "make a deal".
And lastly, because the government has been trying to force mortgage rates down as a way to stimulate the economy, the weak housing data is actually making it cheaper to finance a home. This means that a well-qualified home buyer can better stay within budget.
Each 0.500 percent rate reduction saves $33 per $100,000 borrowed.
It is important to remember, though, that the U.S. housing market is not national -- it's highly localized. This is one reason why national real estate reports can be misleading. Just as figures from Phoenix have little to do with statistics from St. Paul, even data from neighboring ZIP codes can vary.
The universal truth, however, is that a home that is priced fairly will sell more quickly than a home that is not. And, until the Super Bowl passes in 45 days, expect fewer buyers to be out there competing for them.
In late-November, the Federal Reserve pledged $600 billion to buy mortgage-backed securities. The announcement drove down mortgage rates and started the Refi Boom.
Then, the Federal Reserve made a second series of statements after its scheduled meeting last Tuesday, causing mortgage rates to plunge again. This started the Refi Boom's second wave.
Because of the surge in refinance activity, mortgage lenders are "backed up"; initial file reviews are taking up to 12 business days in some cases.
Typically, this process takes 2 days.
Underwriting delays are problem for refinancing Americans because when a mortgage rate is locked, it's most often locked for 30 calendar days -- the standard Rate Lock Agreement contract length. If the mortgage doesn't close within those 30 days, the applicant must either pay an "extension fee" to preserve the lock, or risk losing the rate altogether.
30 days may seem like a long time, but let's consider a few external variables:
December 24, 25, and 26 plus January 1 and 2 are lost to holiday
December 27, 28 plus January 3, 4, 10, 11, 17, and 18 are lost to weekends
This leaves 13 days to get from Application to Closing, and of those 13 days, 12 of them are being spent on the initial review. 30-day rate locks, therefore, may be inadequate with some mortgage lenders. A 45-day agreement may be required instead.
Typically, 45-day rate locks carry higher rates or higher fees, versus their 30-day counterparts. This amounts to a "tax" on borrowers, a result of the nation's rush to refinance en masse. It also may preclude a homebuyer's ability to close in 30 days.
As always, the best way to preserve a rate lock is to be as responsive as possible to the process. Return paperwork when asked, schedule appraisals immediately, and arrange to signing closing paperwork on the first available day.
With mortgage rates low, application volume -- and underwriting turntimes -- should remain high into early-2009.
Posted by Bring the Blog on December 23, 2008 | Comments (0)
Harmful toxins lurk in our homes and keeping the house clean is just the first step towards protection. This 4-minute video from NBC's The Today Show talks about the rest.
Some of the healthful tips include:
Where to physically position a fax/copier in the home office
During the holiday season, retailers bombard shoppers with at-the-register offers to "open a charge card and save 15%".
It's an immediate money-saver, but for Americans in the market for a new home loan, taking advantage of the in-store savings could be a long-term loser.
This is because new credit card applications are damaging to credit scores. According to myFICO.com, "new credit" accounts for 10 percent of a credit score; recent applications may signal weakness in a borrower's profile.
Meanwhile, conforming mortgage lenders make rate adjustments for low credit scoring applicants. As an example, a home buyer with a 20 downpayment and a 715 credit score would face an interest rate adjustment of 0.125%.
Below 700, the adjustments are even worse.
It's okay to take advantage of the in-store savings during the holiday season, but just be aware of how it may impact your credit score going forward. If you're not applying for a new home loan in the next six months, chances are that you'll be alright.
But, if you will need a new home loan, consider whether saving 15 percent on a $200 purchase is worth it if the long-term cost is paying an extra 0.125 percent on your new mortgage.
When it comes to mortgage rates, sometimes it's better to "act now".
On Tuesday, mortgage rates fell to their lowest levels in 4 years. It happened because the Fed said it would "employ all available tools" to resuscitate the economy.
On Wednesday, however, the markets had second thoughts.
After considering the long-term implications of a near-zero percent Fed Funds Rate and the cumulative cost of government intervention to-date, suddenly, traders grew fearful that U.S. government action would devalue the dollar and lead to inflation -- the enemy of low mortgage rates.
As a result, mortgage markets unwound.
At first, the exit was a slow and orderly. Then, without warning, investors began a full-on sprint for the exits. By the end of the day, mortgage rates were higher by as much as a half-percent. Nearly all of Tuesday's big gains were erased.
In hindsight, the reversal Wednesday wasn't all that surprising -- it's the same trading pattern we've seen twice already this year. The first time was after the Fed's "surprise" rate cut in January, and the second time was after the federal takeover of Fannie Mae and Freddie Mac in September.
Sharp rate drops tend to be followed by immediate bounce-backs, it seems.
But, unfortunately, not every would-be refinancing homeowner saw the increase coming. While those that locked at the first opportunity to save money are sitting pretty today, the rest that "waited for rates to go lower" are likely kicking themselves about it.
Going forward, mortgage rates may fall, or they may not. We can't possibly know. But we've now seen the pattern 3 times now -- when mortgage rates plunge like they did Tuesday, they rarely stay that low for long. When you find a rate you like, get in and get locked as soon as possible.
Sleeping on it for even one night may end up costing you dearly.
The Federal Open Market Committee voted to cut the Fed Funds Rate by at least three-quarters percent today. The benchmark rate now rests in a range of 0.000-0.250 percent.
In its press release, the FOMC identified three key economic sectors in which activity has weakened since October. The FOMC noted that:
The U.S. job market is deteriorating
Consumer spending levels are falling
Business investment is contracting nationwide
The Fed intends its rate cut to provide stimulate to each of these areas.
In addition, the voting members of the FOMC singled out inflation as a diminishing threat to the economy. This is an important admission because it's well-known that cuts to the Fed Funds Rate can spark inflation. Rapidly falling oil prices and commodity costs, therefore, likely paved the way for today's historic cut.
In its announcement to markets, the Fed gave The People what they wanted -- a reassurance that the policy-making group would "employ all available tools" to help turnaround the economy. Lowering the Fed Funds Rate to an all-time low is one such step; its plan to purchase mortgage-backed debt in the open market is another.
After the announcement, stock markets rallied and mortgage bonds did, too. Rates ended the day slightly lower.
The Federal Open Market Committee adjourns from its 2-day meeting at 2:15 P.M. ET today.
It's widely expected that the Ben Bernanke-led FOMC will reduce the Fed Funds Rate by a half-percent to 0.500 percent.
Fed Funds Rate cuts are meant to stimulate the economy by lowering borrowing costs for businesses and consumers; interest rates on business credit lines and consumer credit cards are directly tied to the benchmark rate.
However, it won't be what the Fed does today that will be as important as what the Fed says. And the markets are listening closely.
See, this FOMC meeting was originally scheduled to last 1 day but on November 20, it was extended to 2. Presumably, the extra day was meant to give the FOMC a chance to review its options, but now it has the markets expecting "something big".
Wall Street wants Bernanke to outline credit-extenstion plan for banks, businesses and consumers. It wants the Fed to bolster markets to prevent the recession from become a depression. It wants action. Anything short of an explicit plan should push traders into ultra-safe U.S. Treasury bonds and that should lead mortgage rates higher.
If you are floating a mortgage rate today, it may make sense to lock prior to the Federal Open Market Committee's press release. Expect volatility beginning around 2:00 P.M. ET today.
Lock manufacturer Kwikset recently introduced its SmartCode series, a keyless entry system to replace existing door hardware.
As an alternative to keyed-entry systems, the SmartCode series allows you to create two personalized access codes -- one for you, and one for a guest, contractor, or anyone else in need of temporary entry to your home.
Locks can be rekeyed at any time for new guests.
A popular feature of the SmartCode series is its motorized, 1-inch deadbolt. The deadbolt opens upon unlocking, eliminating the need to "turn a handle" to open -- just push the door.
A mortgage is a contract between a lender and borrower, defining the terms by which a home loan must be repaid.
The paperwork, signed by both parties, includes provisions for things like:
The interest rate
The length of the loan
The amount of money to be borrowed
But, like all loans, a mortgage loan can be paid off at any time. So, when market interest rates fall, homeowners will often exercise their right to an "early payoff" by securing a new loan that pays off the old one.
This process is most commonly known as a refinance.
A refinance is the changing of the loan terms against a property, often for a better interest rate or a lower monthly payment. When the refinance process is complete, the original lender's loan is paid in full using the money from the new lender's loan and the former's relationship is officially terminated.
There's no rule against how many times a person can refinance, nor is there an easy way to determine whether or not a refinance makes sense. In general, if you can reduce your monthly payment while limiting your closing costs, to refinance is a smart decision.
However, there are other reasons to refinance, too, including:
To convert from an ARM into a fixed rate mortgage (or vice versa)
To extract equity for paying off third-party debts or for cash
To extend a loan from 15 years to 30 year for payment relief
Because there are fewer third-parties involved with a refinance, it's often simpler and less expensive than a comparable purchase transaction. The paperwork stack is often smaller, too.
Posted by Bring the Blog on December 12, 2008 | Comments (0)
It's the age-old question for home buyers in need of a mortgage:
Which is better: Fixed or ARM?
Historically, the answer has hinged on a homebuyer's desire to meet one of two mutually-exclusive mortgage financing goals:
Get low mortgage payments for better cash flow
Get long-term payment stability for better budget planning
But because of government intervention and lingering questions about the economy, fixed-rate mortgages are now pricing cheaper than their adjustable-rate counterparts.
Based on today's mortgage market, therefore, home buyers can get both.
Versus a comparable 5-year ARM, conforming fixed-mortgage rates are priced roughly 0.250 percent lower and have been over the past 19 days. The quarter-percent difference equates to $33 saved per month on a $200,000 home loan.
Mortgage markets are ever-changing so rates we can't know if this pricing anomaly will last. But, while it does, the decision to choose Fixed over ARM is a lot simpler.
Posted by Bring the Blog on December 11, 2008 | Comments (0)
For most Americans, mortgage interest paid on a home loan is tax-deductible in the year in which it was paid.
With advance planning, therefore, homeowners can increase their 2008 tax deductions and limit their tax liability on April 15.
The key is to make the January 2009 mortgage payment before the New Year begins.
In making the payment in 2008, the payment's mortgage interest is applied against this year's tax deductions instead of next year's. And lest you think you're paying "in advance", remember that mortgage interest is paid in arrears; a payment due January 1 accounts for interest that accumulated in December 2008 anyway.
Tax planning is a complicated issue and not all homeowners will qualify for mortgage interest tax deductions. Check with your tax professional before making tax planning decisions.
If you don't have an accountant you trust, call or email me anytime; I'm happy to make a recommendation to you.
Posted by Bring the Blog on December 10, 2008 | Comments (0)
Earlier this year and under pressure from the government, mortgage lenders made more than 200,000 loan modifications to delinquent homeowners.
The modifications came in one of three forms, or a combination:
Interest rate reduction
Loan term extension
Principal forgiveness
But despite the modifications, as of October 1, more than half of the homeowners that received assistance were already two months behind on their modified monthly payments.
This late-pay statistic was a focal point on Capitol Hill yesterday as the government admitted delinquencies "were larger than [they] thought they'd be". Loan modifications are proving inadequate at slowing foreclosures and yesterday's session opened the door to more effective foreclosure prevention measures.
However, of all of the statistics published, there was one of particular interest.
Based on its loan modifications to-date, the FDIC has found that modified borrowers default far less when new monthly payments are less than 38 percent of monthly household income. This is important because Freddie Mac guidelines for ordinary mortgage applicants currently cap that rate at 45 percent.
If the 38 percent figure holds up long-term, it may lead mortgage lenders to permenantly reduce maximum debt-to-income allowances. Already, mortgage insurers have taken this step so it's not out of the question for lenders. Tighter guidelines mean fewer mortgage approvals.
If you're unsure of whether now is a good time to buy a home, consider that mortgage rates are low, mortgage guidelines are tightening, and foreclosure prevention efforts reduce the supply of available homes.
Prices may not have bottomed, but the market is giving everyone a lot of reasons to consider buying now.
As the weather turns cooler and home heating systems get fired, it's important to safeguard your home from carbon monoxide gas. Often called the "slient killer", the odorless and colorless gas accidentally poisons about 170 Americans each year.
The video above from CBS News tells the story of 2 such deaths.
Throughout the 5-minute piece (and after the commercial), note the mother talking about headaches, fatigue and nausea. Because carbon monoxide poisoning shows similar symptoms to the flu, many people confuse the two -- sometimes with fatal consequences.
Experts say to outfit each room in your home with a carbon monoxide monitor. The recommended monitor from the video is available at Amazon.com for $10 off.
Posted by Bring the Blog on December 08, 2008 | Comments (0)
According to the government, American businesses are cutting staff at an accelerated pace, most recently paring 533,000 jobs this past November.
It's the largest one-month decline since December 1974 and raises the year-to-date job losses to 1.9 million workers.
However, there is a silver lining in the data for all Americans -- both employed and unemployed.
With each piece of negative news about the economy, Washington is more likely to pass new stimulus packages to the benefit of household budgets.
On one front, Federal Reserve Chairman Ben Bernanke has already alluded to further Fed Funds Rate cuts at the Fed's two-day meeting starting December 15. Because the Fed Funds Rate is directly tied to Prime Rate, any cut in the benchmark lending rate would lead "floating" interest rates lower on home equity credit lines and other revolving debt.
And this talk from the Fed also comes on the heels of its $500 billion pledge to buy mortgage-backed bonds. That demand-shifting move was announced last week and drove mortgage rates lower. It also marked the official start of the refinancing boom.
And, lastly, Capitol Hill is already responding to the jobs data with calls for "urgent" action. It's a vague term, to be sure, but history has shown that Congress could pass any number of measures, each meant to put more money into household budgets nationwide.
The end result is that today's job data is a non-event of sorts for active home buyers. Mortgage markets expected a poor reading and they got it. Normally, data like this would cause mortgage rates to spike but this is not a normal market.
Now, with markets expecting additional stimulus, mortgage rates are edging lower today with hopes of an economic rebound.
Business television is abuzz this morning with talk of "four-point-five percent mortgage rates"; the clip above ran on NBC Today. The news stems from a leaked story that the U.S. Treasury will intervene in the mortgage market, lowering rates a full percentage point below their current levels.
As cited by every journalist in every publication, however, the story is 100% speculation. Naturally, that doesn't stop the press from covering it. When hope for homeowners gets spread in this manner, it's important to remember some facts:
The Treasury doesn't set mortgage rates -- Wall Street traders do. Historically, rates are based on the Supply and Demand for mortgage-backed bonds.
Treasury intervention doesn't guarantee low rates. That mortgage rates are up by a half-percent since last week proves it.
Zero details about the plan have been confirmed, quoting CNBC. Everything you've heard about 4.5 percent rates is a guess at this point.
But, perhaps most importantly, nearly every analyst interviewed has expressed a belief that a Treasury-sponsored stimulus would apply to home buyers only. Homeowners wanting a refinance, in other words, would be ineligible.
Mortgage rates are very low today compared to where they've been in 2006, 2007 and 2008. If you think your mortgage rate is too high for this market, reach out to your loan officer to review all of your options. If rates really do reach 4.500 percent, you can always refinance again later.
Posted by Bring the Blog on December 04, 2008 | Comments (0)
For the 78th consecutive day, gas prices fell nationwide yesterday. At $1.81 per gallon, the average price at the pump is less than half what it was at its peak in July.
And although gas prices vary by locale, the cost of a fill-up is worthy of national news.
The main reason why national gas prices matter is because of something called the Wealth Effect -- people's tendency to spend more money when they have a perceived feeling of being worth more.
Low gas prices can amplify the Wealth Effect, leading to higher levels of consumer spending nationwide -- the primary driver of the U.S. economy.
But more important than the Wealth Effect is the reverse Wealth Effect. That's when consumers have a perceived feeling of being worth less and their spending reflects it. This past summer is a terrific example of it.
Soaring gas prices, Wall Street troubles, and negative campaigning constantly reminded Americans of what was wrong with the economy. It follows, therefore, that retail sales figures plunged in September and October. Once the election passed, however, and gas prices fell, a gentle optimism returned.
All of this matters to real estate because as Americans regain their confidence and feel more "wealthy", they will be more likely to make "move up" purchase, buy new home appliances, and take other actions that propel the economy forward.
Oh, and mortgage rates trolling at 3-year lows certainly helps, too.
Each Wednesday, the Mortgage Bankers Association releases its Weekly Applications Survey, a detailed look at new mortgage applications submitted over the previous 7 days.
This week's report will reveal what most of us already know -- plunging mortgage rates created a flood of mortgage activity.
If you're among the many Americans taking advantage of today's low rates, don't forget that when your rate was "locked", it was locked with an expiration date.
Most likely, that rate lock is for 30 days.
And, while 30 days may seem like a long time, it's not. Especially because rate locks made prior to Thanksgiving lose a combined 14 days to weekends and holidays, plus another 4 days to the Right To Cancel clause.
A 30-day rate lock, therefore, yields just 12 "working" days in which to underwrite and approve the mortgage and that's not a lot of time at all.
Making matters more difficult, many lenders are ill-equipped for boom.
Not only has staff been pared down in expectation of a slowing economy, but December a prime vacationing month, too. Lenders are short-staffed at a very inopportune time.
So, for active refinancing homeowners, the best way to preserve a 30-day rate lock is to be as responsive as possible to the process:
If paystubs are requested, return them on the same day
If a home appraisal is needed, schedule the appraisal immediately
If a closing date is scheduled, don't postpone it by a day
As mortgage rates hang near 3-year lows, the number of refinancing homeowners nationwide will grow, further taxing lenders and their staff. If you already have a loan in process, be pro-active about it to prevent your 30-day rate lock from expiring.
Posted by Bring the Blog on December 02, 2008 | Comments (0)
When choosing a room's paint colors, Interior Designers follow the 60-30-10 Rule.
The 60-30-10 Rule says that color usage in a space should be based on percentages:
60% of the room should be a dominant color
30% of the room should be a secondary color
10% of the room should be an accent color
It's a design method used by the world's top designers and featured in countless design magazines. But, you don't have to spend money on a professional to get your color combinations right.
Courtesy of HGTV, the Choose Color tool shows 39 off-the-shelf palettes and uses them to apply the 60-30-10 Rule to actual rooms in a house. The interactive tool also features in-line design tips to make the most of your space and budget.
The day after Thanksgiving is a busy shopping day nationwide and, this year, analysts are paying extra attention to sales figures.
Dubbed "Black Friday" in reference to red ink representing loss and black ink representing gain, today's start to the Holiday Shopping season is believed to be the day that retailer balance sheets finally cross over to profitability.
But the accounting connotation of the phrase "Black Friday" wasn't its original usage -- it's a media-coined term.
When the phrase was first used in Philadelphia in 1975, it was in reference to the day after Thanksgiving being the busiest shopping and traffic day of the year.
There's other Black Friday trivia out there, too:
Did you know? Black Friday is neither the largest, nor the most profitable, shopping day of the year. Contrary to popular wisdom, it's the 5th biggest, not the first. The two weekends before Christmas are usually the "biggest" series of days.
Did you know? In an attempt to spur the economy in 1939, President Franklin D. Roosevelt proposed to move Thanksgiving ahead by 7 days. 7 more days of shopping, he thought, would help retailers and help the economy. Eventually, the idea dubbed "Franksgiving" failed.
Did you know? To protect competitors from price matching "deals", some retailers copyright their Black Friday advertising. Others won't print prices at all.
Did you know? Last year, 14 percent of Black Friday shoppers had made a purchase prior to 4:00 A.M. with an average ticket of $347.
Black Friday is of special significance this year because consumer spending accounts for two-thirds of the U.S. economy. If Americans are shopping in full force, expect economic optimism and a mild rebound in the stock market. Unfortunately for home buyers, this should also lead mortgage rates higher.
By contrast, if sales figures are weak, expect talk of recession to grow.
Sources Black Friday (Shopping) Wikipedia http://en.wikipedia.org/wiki/Black_Friday_%28shopping%29
Geek Trivia: Early bird special Tech Republic Jay Garmon, Nov 22, 2005 http://articles.techrepublic.com.com/5100-10878_11-5958978.html
Like everything else on Wall Street, mortgage markets are based on supply and demand. When demand outweighs supply, mortgage rates fall.
So, Tuesday, when the government unexpectedly announced a $500 billion budget for buying mortgage debt from Fannie Mae and Freddie Mac, the demand side of the mortgage market ballooned.
The surprise demand helped push mortgage rates to their lowest levels since January 22, 2008. 30-year fixed mortgage rates were down by as much as three-quarters of a percent Tuesday before retreating higher.
Not coincidentally, January 22, 2008, was the date of another unexpected government intervention -- a surprise 0.750 percent Fed Funds Rate cut that was meant to spur the economy forward.
Interventions like these are a big reason why predicting mortgage rates is tough business -- just when you discover the market's balance point, an outside force shifts that balance, creating tremendous amounts of uncertainty about the future.
Uncertainty on Wall Street is typically bad for mortgage rate shoppers because it leads to high levels of volatility. Look at the trading pattern from Market Open to Market Close yesterday:
8:30 AM ET: Markets open with rates falling on the news
10:00 AM ET : Rates fall more on momentum trading
12:00 PM ET : Rates level at their lowest levels of the day
2:00 PM ET : Rates rise as profit-taking begins
3:30 PM ET : Rates rise more on momentum trading
4:00 PM ET : Markets close with rates down by half
Again, not coincidentally, this is the exact trading pattern from January 22, 2008. On that day, rates were at their lowest about 3 hours into trading, and then consistently rose all the way into Market Close -- just like we saw Tuesday.
Unfortunately, in the 30 days that followed January 22, mortgage rates rose from a 3-year low to a 3-year high. And, it's not to say that the same thing will happen from now through December 25, but trading patterns have a tendency to repeat themselves over time.
Mortgage markets seek balance and when there's a dramatic shift, chaos can creates opportunity. Tuesday's $500 billion pledge added new demand and shocked the mortgage market system. Before long, it recovered to find balance.
As of today, mortgage rates are still hovering near their 3-year lows so if you haven't spoken to your loan officer about a refinance, consider calling today.
Posted by Bring the Blog on November 26, 2008 | Comments (0)
In real estate, the term existing home refers to a "used" property; one that can't be classified as new construction.
The number of existing homes sold each month is tracked by the National Association of REALTORS. The report is often used as a gauge for the health of the real estate market nationwide.
In October, nearly 5 million existing homes sold across the U.S. This figure represents a slight drop from September's reading, and a equally slight drop from the October 2007 data.
But, October's Existing Home Sales figures marked the 14th straight month in which Existing Home Sales straddled 5-million units. This is a remarkable statistic because 14 months of anything is a pattern, not a blip. Despite what the news tells us, Americans are buying and selling real estate at a somewhat steady clip.
As we head into the Holiday Season, buyer activity should slow, reducing demand for homes. At the same time, however, widespread foreclosure moratoriums should reduce the number of homes available to buy. These forces should counter-act to help keep the market (and prices) in balance.
To run at peak efficiency, heating, ventilation and air conditioning (HVAC) unit must be kept clean. Efficiency saves power which, in turn, saves money.
Watch the 1-minute video above and learn how to replace an air filter. HVAC air filters should be changed at least quarterly, with more frequent replacements in certain homes:
Homes under construction or in repair
Newly-built homes with loose dust in the air
Homes of families with allergies or asthma
Homes of families with shedding pets
Be aware, however, that not all air filters are created alike.
When it comes to air purification, you often get what you pay for as The Carey Brothers prove in this other 1-minute video. Using "The Salt Test", we see with our own eyes how 99-cent filters are inferior to $16 ones.
Business television and newspapers have made deflation a hot topic this week and, since Monday, Google has tracked 13,000 mentions of it.
Deflation is a recurring cycle in which the prices of goods and services fall. Isolated to one industry or sector, falling prices is the natural result of competition.
For example, when DVD players were first introduced, they were tagged at $800.
Across many industries, however, and happening at the same time, falling prices can shut down the economy. Rather than buy things on the cheap, people stop buying anything at all. And why would they? The same items will cost less tomorrow.
And this is the problem with deflation -- it halts consumer spending and consumer spending makes up two-thirds of the U.S. economy. When it stops, the economic result is dwindling corporate revenues which leads to:
Layoffs of the workforce, which leads to...
Less consumer spending, which leads to...
Dwindling corporate revenues, which leads to...
And the spiral continues.
Deflation can be much more insidious that its expansionary counterpart -- inflation. Inflation is when the prices generally rise over time and it's an economic condition through which governments can comfortably navigate. Deflation, on the other hand, is more rare and, therefore, fewer practical control measures exist.
Whether the U.S. economy will slip into deflation is a matter of debate.
The Fed has cut the Fed Funds Rate to promote economic growth and those changes can take up to 12 months to work their way through the economy. Deflationary pressures we're seeing today, in other words, may have already been addressed and corrected by Ben Bernanke's 10 rate cuts in the last 14 months.
Until the market figures it out, though, expect that each mention of deflation will hurt the stock market and help the bond market -- including the mortgage-backed variety. This should help lower mortgage rates and make homes more affordable.
When it comes to housing data, there are always two questions to consider:
How does this impact buyers?
How does this impact sellers?
This is why housing data is rarely positive or negative on a universal level -- one group of Americans is going to see benefit.
Today, it's home sellers.
From the government, we learn that Housing Starts fell to their lowest levels since 1947 last month. A "Housing Start" is a new housing unit on which construction has started. Building permits are down, too.
This is all good news for people selling their homes in the coming months. As fewer homes are built nationwide, there is less inventory from which home buyers can choose. With fewer homes for sale shifts the supply-and-demand curve, adding a stronger support floor to home prices.
For home buyers, though, the Housing Starts data may not be as welcome.
With fewer new homes coming on the market, owners of "used" homes may feel less pressure to lower asking prices or to make other concessions. Home buyers often pay more when home supply is falling, or find that sellers are less willing to add "throw-ins" to a contract.
For all of the analysis that surrounds real estate data, in the end, home prices are based on the supply of homes versus the demand for homes. When supply outpaces demand, home prices fall, and vice verse.
Homebuilders know this and October's Housing Starts data reflects it.
If the presence of inflation causes mortgage rates to rise, then the absence of inflation should cause mortgage rates to fall. And, in most markets that's true.
Today, it's not.
Despite a deep dip in consumer prices not seen since 1947, mortgage rates are inching higher this morning.
Higher mortgage rates make homes less affordable to home buyers.
The main reason why rates are rising today is that the Cost of Living didn't just ease last month -- it plunged. In fact, the monthly drop was so severe that Wall Street now questions whether this summer's record-breaking inflation will lead to equally-strong deflation this winter.
In economic terms, deflation is the opposite of inflation -- it's when prices and wages chase each other lower. The two can be equally bad for the economy. What's often best for Americans are moderate, steady readings.
Because of the rapid decline, markets fear that Consumer Prices may have swung way past moderate in October and started a downward spiral. As always, however, market opinions can change quickly and when they do, they usually take mortgage rates with them.
In March 2008, HUD temporarily raised FHA loan limits around the country. Effective January 1, 2009, FHA loan limits revert.
FHA home loans are mortgages made by private lenders and insured by the federal government.
Historically, FHA home loans have been "easier" for which to qualify than their conforming mortgage counterparts and, therefore, tend to be associated with borrowers of tarnished credit quality.
Today, that's the not the case.
The FHA home loan underwriting process can be as tough -- or tougher -- than a conforming mortgage underwrite. There is extra documentation required and the home appraisal process is often more thorough.
Where FHA home loans shine is in their limited downpayment requirements.
To purchase a home with a FHA-insured mortgage requires a 3 percent downpayment as of today; in January, it moves to 3.5 percent. Versus the typical conforming mortgage requirement of 5 percent or more, FHA serves as somewhat of a home affordability product for Americans. In addition, FHA allows larger "cash out" refinances than Fannie Mae or Freddie Mac.
Note that the loan limits don't apply to all areas of the country equally. Higher-cost regions feature higher loan limits, based on typical home values. Homes in Los Angeles County, for example, can be FHA-insured up to $625,500 in 2009, and there are exceptions made for Alaska and Hawaii.
The official FHA announcement published all of the counties with access to higher loan limits, spread across two spreadsheets. The first spreadsheet lists each county at the $625,500 maximum; the second list is everyone else.
If your home county is on neither list, use the "base" numbers above.
Posted by Bring the Blog on November 18, 2008 | Comments (0)
Vacuum cleaners are meant clean our homes, but in addition to picking up dirt, dust and mites, most vacuum cleaners also spread harmful bacteria.
As revealed in this this 4-minute video from NBC's Today Show, E. Coli, salmonella and other virus-causing entities are commonly found on vacuum cleaner under-bristles and, in some cases, bacteria can be 100 times more concentrated than on a public toilet seat.
The video goes on to give some general rules to limit indoor germ exposure -- some more practical than others. The rules include:
Avoid wearing shoes indoors
Wash your hands after playing on the carpets and rugs
Don't stop vacuuming
And, of course, having the right hardware can help, too.
If it's time to replace that old vacuum, start your search online with a discount store like GoVacuum.com. Most online sites will have a wider selection than your local hardware store and shipping is usually free.
Posted by Bring the Blog on November 17, 2008 | Comments (0)
To help demystify the mortgage process, the federal government is giving the much-maligned Good Faith Estimate document a makeover. Effective January 1, 2010, the current, 2-page form will be replaced by a new, easier-to-understand version, spanning 3 pages.
The biggest strength of the new Good Faith Estimate is that it uses everyday English to explain how the mortgage works. For example, in one section titled "Loan Summary", the Good Faith Estimate specifically answers:
What is your interest rate?
Can your interest rate rise?
Does your loan have a prepayment penalty?
Using today's disclosures, the answers are spread across 3 separate forms.
In addition, the new-look Good Faith Estimate identifies what charges are legally allowed change at the time of settlement, and how a mortgage applicant can opt for higher fees in exchange for a lower mortgage rate, and vice versa.
These educational elements are lacking from the current model.
But for all of its clarity, the Good Faith Estimate doesn't address the issue of suitability. As in, is this the right loan for the right borrower? The new Good Faith Estimate won't prevent homeowners from choosing "bad loans" -- it will only educate them about the loan's facts.
For suitable advice -- as always -- talk with a trusted mortgage professional who will both listen to your needs and help you make plans for them. Getting the "best terms" on an unsuitable loan can be far worse that getting great terms on a loan that fits.
Posted by Bring the Blog on November 14, 2008 | Comments (0)
And those 4 states -- California, Florida, Arizona, and Nevada -- share some very similar characteristics including:
Their respective popularity with retirees and real estate investors
Their large home value increases earlier this decade
In looking at the rest of the country's foreclosure data, the remaining 46 states combined accounted for just 48.8 percent of October's foreclosures.
That's 1.06% per state on average.
Now, this isn't meant to diminish the impact of foreclosures on the economy -- quite the opposite. Foreclosures harm to the national housing market because most mortgage lenders are national. But, we highlight statistics like this to show that the foreclosure "problem" isn't so bad in most parts of the country, relative.
Furthermore, mortgage lenders are intervening to slow the flow of defaults nationwide. Following the lead of JP Morgan and Bank of America, CitiMortgage announced a sweeping plan this week to help homeowners avoid default and stay in their homes.
In a way, for as good as this news is for homeowners, it's equally bad news for home buyers. As the number of foreclosures decrease in any given market, it reduces the inventory of homes for sale. Lower supply levels often lead to higher sale prices and less room to negotiate.
And this may be what the banks are trying to accomplish.
Posted by Bring the Blog on November 13, 2008 | Comments (0)
Loans in excess of conforming loan limits are more commonly called "jumbo", or "super jumbo" home loans, depending on their size.
Out-sized mortgages like these are often more costly than their conforming-mortgage counterparts because jumbo loans are not guaranteed by the U.S. government like Fannie Mae loans are.
There are exceptions to the loan limits, however.
Left over from the Economic Stimulus Act of 2008, specific, "high-cost" areas around the country have their own conforming loan limits, not to exceed $625,500. There are 59 designated high-cost regions in the U.S., most of which are in California.
Loan limits are re-assigned each year, based on "typical" housing costs around the country. Since 1980, as home prices have increased, so have conforming loan limits. As home prices have fallen in recent years nationwide, however, the conforming loan limit has not.
Posted by Bring the Blog on November 12, 2008 | Comments (0)
If the amount of air that leaked from a typical home's gaps and cracks was measured, it would equal the amount of air that leaves through an open window.
This is why so many Home & Garden experts recommend a recaulking of your home prior to the Winter -- a solid caulk job can reduce a home's Winter energy bill by 20 percent.
In this 2-minute video from Home Depot, learn how you can to identify leaky windows, and then how to fix them using caulk, putty knives and a host of other tools. Or, if DIY is not your style, find a competent contractor online.
The project is small so the costs should be low.
Posted by Bring the Blog on November 10, 2008 | Comments (0)
On the first Friday of every month, the Bureau of Labor Statistics releases its Non-Farm Payrolls report.
More commonly, it's called the "jobs report" and the October's data is trending with the rest of 2008.
After shedding another 240,000 jobs last month, the economy has now put 1.2 million Americans out of work this year and unemployment rates have climbed to 14-year highs.
As a strange twist, though, today's weak jobs data may lead to a positive turn for the economy and for housing in 2009.
In the wake of the jobs report, members of Congress are already calling for both tax cuts and direct stimulus to reverse the course of the economy. Both of these actions would put money back into U.S. citizens' household budgets, spurring consumer spending nationwide.
Because consumer spending accounts for 70 percent of the economy, this would be expected to push the economy forward at a time when it natural forces are slowing it down.
In addition, markets are betting that the Federal Reserve will cut the Fed Funds Rate below its current 1.000 percent level. This, too, would spur spending because the Fed Funds Rate is directly tied to consumer credit card rates and business credit lines.
Expectations for stimulus are one reason why mortgage rates have not risen today as high as they otherwise would have if this were a "normal" market.
Mortgage rates are slightly elevated as we head into the weekend, but don't be surprised if there's a late-afternoon push that brings them lower. For active home buyers, this could help home affordability as we cruise towards the holiday season.
The interest rate against which adjustable-rate mortgages change is falling -- evidence that the global banking system is starting to stabilize.
This is good news for U.S. housing markets.
On any adjustable-rate mortgage, the initial "starter rate" remains fixed for some period of time, and then adjusts according to some pre-determined rules.
For a conforming mortgage, an ARM will typically adjust once per year, based on this formula:
(Adjusted Rate) = (Variable) + (Constant)
Where the variable is often assigned to 12-month LIBOR, and the constant is often fixed at 2.250 percent.
LIBOR is the equation's variable. Therefore, it's of paramount import to holders of ARMs. LIBOR is the rate at which banks lend money to each other. The 12-month LIBOR, therefore, is the borrowing rate for a 1-year, interbank loan.
So, to take the formula and apply to an real live mortgage, a homeowner's adjusted mortgage rate would be equal to whatever the 12-month LIBOR is at the time of adjustment, plus another 2.250 percent.
Looking at the chart, note LIBOR spiked in September. It's a direct correlation to the September 15 failure of Lehman Brothers. That bank shutdown started a wave of "who's going to be next?" anxiety on Wall Street but as global governments stepped up support for banks, LIBOR predictably fell.
For homeowners with adjusting mortgages, this is terrific news.
However, mortgage markets have rallied a bit this week, created an interesting opportunity for some ARM-holders. Depending on credit scores and the amount of home equity, mortgage rates on a new loan may be lower that the soon-to-be-adjusted mortgage rate of the old one.
In other words, getting a new loan may be smarter than letting your current mortgage change. Contact your mortgage lender to see which plan fits you best.
Posted by Bring the Blog on November 06, 2008 | Comments (0)
The Federal Reserve confirmed what most of us already knew -- getting qualified for a "prime mortgage" is increasingly more difficult.
In a quartely survey of 84 banks, 75 percent of respondant banks tightened mortgage guidelines over the last 3 months for the most qualified of home loan applicants.
"Prime" is a vague term when it comes to mortgages, but, historically, a prime borrower is one that can document:
A well-documented credit history
Very high credit scores
Very low debt-to-incomes
Historically, banks bent over backwards to lend money to this class of borrower. Today, they're thinking twice.
The chart's steep ascent reinforces that members of all tax brackets face consequences from the current credit market turmoil. And, although some corners of credit looked poised to recover -- interbank lending, for one -- the mortgage market is yet unaffected and should be among the last to thaw.
All prospective home buyers should prepare for the likelihood that mortgage guidelines continue to toughen before they start to ease. Mortgage applicants on the cusp of being approved today will almost certainly be turned down for a mortgage in 2009.
Owning real estate can require a tremendous amount of advance planning and, sometimes, looking at the past is the best way to prepare for what's coming ahead.
According to the Federal Reserve's survey, what's coming ahead is more mortgage application scrutiny.
Posted by Bring the Blog on November 05, 2008 | Comments (0)
More than a handful would-be home buyers stayed on the sidelines this year, waiting for Election Day to pass.
The prevailing thought was that once the new President-Elect was identified, credit markets will systemically unfreeze and housing markets will return to normal.
If history is a guide, this is an unlikely scenario.
Election Day doesn't figure to alter markets any more in 2008 than it did after the four previous presidential elections.
If anything, post-Election Day market reaction has been muted:
1992 : Dow closes down 0.9 percent the day after Election Day
1996 : Dow closes up 1.6 percent the day after Election Day
2000 : Dow closes down 0.4 percent the day after Election Day
2004 : Dow closes up 1.0 percent the day after Election Day
But just because the stock market has a history of idling on the day after the election doesn't mean that mortgage rates will rest easy this week. The likely outcome is the opposite, actually.
If investors believe the President-elect will successfully stimulate the economy, stock markets would likely rally, causing mortgage bonds to sell off and mortgage rates to rise.
Higher mortgage rates means higher monthly payments on a home.
Or, if investors think the winning candidate will fail to revive the economy, money would flock to government bonds as a place of safety. This dollar flow would occur at the expense of the mortgage market, causing rates to rise in this scenario, too. Again, higher home payments.
Of course, it's as difficult to predict post-Election market conditions as it is to predict the election itself but one thing is for certain -- rates may rise and fall before the week is out, but credit guidelines will remain extra-tight. Getting approved for a mortgage won't be any easier -- no matter which party wins the Presidential Election.
When a home is listed for sale, fresh flowers in various rooms can add life and color to the property, increasing the home's marketability. And courtesy of 5-Minute Life, here are some tips to make those flowers last longer.
Dip flower stems in boiling water before vasing them
Allow vase water to sit for an hour before adding flowers
Add a small amount of bleach to the vase water
Keep the flowers away from fruit
Of course, fresh flowers go well in any home -- not just those listed for sale. If you're buying them, the video above will help you get more for your money.
Posted by Bring the Blog on November 03, 2008 | Comments (0)
When the government nationalized mortgage lending in September, housing analysts predicted lower mortgage rates.
For a brief two-week stint, they were right -- post-takeover, the 30-year, fixed rate mortgage fell below 6.000 percent nationally for the first time in 7 months.
Since then, however, mortgage markets have reversed. Rates are now at pre-takeover levels.
Now, this isn't to say that the nationalization was a failure -- far from it. The government's takeover of Fannie Mae and Freddie Mac accomplished two very important goals:
It restored failing confidence in the U.S. mortgage markets
It opened legislative channels for faster, more relevant housing reform
And, long-term, most people agree, these are essential elements for a U.S. economic recovery. Over the short-term, however, the plan has not delivered the sustained low mortgage rate environment that was envisioned.
The biggest reason why rates are higher is because of Wall Street's manic trading behavior. When the economic outlook shows hints of sun, investors sprint to risky stock markets; when it shows signs of gloom, they flee in favor of ultra-safe treasuries. The buy-sell patterns have led to some of the wildest trading days on record and it's not what the Treasury expected.
See, when the takeover was first announced, mortgage-backed bonds were elevated to "government status". This created new demand for mortgage bonds which helped to push down rates. But, in the weeks that followed, the world's credit markets unraveled and traders sought the dual comfort of safety and liquidity in their portfolios.
That's a combination that only U.S. treasuries can provide. Versus "true" government bonds, mortgage-backed securities are just quasi.
We can't know where mortgage rates will move for certain but, for now at least, the 4 percent range some had predicted is out of reach. Until credit order is restored globally, expect volatility to continue and rates to remain up.
The Federal Open Market Committee voted to cut the Fed Funds Rate by one-half percent today. The benchmark rate now stands at 1.000 percent.
In its press release, the Fed wasted no time addressing the key issue at-hand, stating that economic activity has "slowed markedly", pointing to three main causes:
Consumer spending is falling
Business equipment spending is falling
Slowing foreign economies are hurting U.S. businesses
Furthermore, the voting FOMC members are wary of an "intensification" of the current financial market turmoil.
The announcement's 4th paragraph is noteworthy, too. It lists the plethora of growth-stimulating steps that the Fed has taken so far this year and concludes that credit conditions should improve in time. It does notes, however, that if markets don't improve in good time, the committee will "act as needed".
In the wake of the announcement, stock markets rallied. Investors liked what the Fed had to say and it drew funds into the stock market from all corners of Wall Street. Unfortunately for mortgage rate shoppers, one of those corners happened to be the mortgage bond market.
The exodus from bonds caused mortgage rates to rise.
It's a common misconception that the Federal Reserve controls mortgage rates and today's market action should help dispel that myth. As the Fed Funds Rate falls back near its 50-year low, mortgage rates are bumping up against a 3-year high.
Source Parsing the Fed Statement The Wall Street Journal Online October 29, 2008 http://online.wsj.com/internal/mdc/info-fedparse0810.html
Posted by Bring the Blog on October 29, 2008 | Comments (0)
The Federal Open Market Committee adjourns from its scheduled 2-day meeting today at 2:15 P.M. ET and the markets are eagerly awaiting the central bank's press release.
In it, Fed Chairman Ben Bernanke is expected to address the U.S. economy, the future of credit, and the new Fed Funds Rate.
It's this last point to which mortgage rate shoppers should pay attention -- when the Fed Funds Rate falls, mortgage rates tend to rise.
The inverse relationship between mortgage rates and the Fed Funds Rate is based on the idea that cuts to the Fed Funds Rate are designed to add gas to U.S. economic engine.
In theory, over time, Fed Funds Rate cuts work to improve Corporate America's balance sheets, thereby rewarding shareholders. Therefore, when the Fed Funds Rate falls, or is expected to fall, investors often rush to buy stocks before their prices get bid up. Part of that process, of course, includes selling the "safe" parts of their portfolio which are usually loaded with mortgage-backed bonds.
If you were looking for a reason why mortgage rates tanked Tuesday while the Dow Jones added 11%, now you have it.
A 0.250% rate cut is expected by 5 percent of traders
A 0.500% rate cut is expected by 45 percent of traders
A 0.750% rate cut is expected by 40 percent of traders
A 1.000% rate cut is expected by 8 percent of traders
Without a consensus opinion among traders, no matter what the Fed does today, a lot of investors will be forced to rebalance their portfolios to account for their "bad bets". This will add to market volatility for sure.
Mortgage rates are calm this morning. The calm likely won't last. If you are floating your mortgage rate and want to avoid additional risk, consider locking your rate prior to the FOMC press release.
Posted by Bring the Blog on October 29, 2008 | Comments (0)
Despite turmoil on Wall Street, the housing sector continues to deliver good news.
Last month, led by a 22 percent surge from the West Region, New Home Sales rose 2.7 percent over August.
A "new home" is a newly-built residence, never before lived in. New homes are usually built and sold by real estate development companies and their respective marketing firms.
The surge in New Home Sales volume is consistent with the other good news we've seen from the housing sector. It marks the 4th positive signal in the last two weeks.
October 24: The supply of "used homes" falls to an 8-month low
October 27: The supply of new homes falls by 7 percent
However, it can't be ignored why housing is showing a statistical improvement. The main causes are two-fold:
Banks are getting better about selling foreclosed homes
Builders are keen to dump their excess inventory
Both of these factors drive down home sales prices nationwide which, in turn, draws value-seeking home buyers back to the market. In addition, because the number of active sellers dwarfs the number of active buyers, today's home seekers enjoy a tremendous amount of negotiation leverage, making real estate even more attractive.
But, as witheverything in business, markets seek balance. As home supplies dwindle, buyers' ability to negotiate sales prices and closing costs will fall. It's Supply and Demand -- as supplies drop, relative demand rises, and prices rise with it.
In every American neighborhood, homes that are priced "right" are selling quickly. And now that banks and builders have figured out the formula, more homes are going under contract than at any time since 2007.
Much of the current economic climate is being blamed on housing. If the data is accurate, though, we can infer that the climate may not last much longer.
Now that you've replaced your home's energy-hogging light bulbs with compact fluorescent ones, meet the next wave of environmentally-friendly home lighting -- LED.
Though nearly 10 times as expensive as compact fluorescent bulbs, LED lights hold several advantages as a green alternative:
LED bulbs consume up to 1/30th of the energy of a CFL
LED bulbs contain no mercury or other toxins
LED bulbs last up to 60,000 hours
LED bulbs are suitable for dimmer and sensor-activated switches
LEDs aren't without disadvantages, however. The aforementioned bulb cost is one of them -- units can exceed $40 each. The limited "light angle" is another. LED bulbs do not spread light over as wide an area as CFLs or incandescent bulbs.
However, long-term, LED light bulbs save more money than any other commercial available light bulb choice and are better for the environment.
Statistics are what you make of them, but sometimes, they can provide good perspective.
For example, from its peak in 2005 to its trough in late-2007, the number of "used" homes sold nationwide plunged.
In 2005: Roughly 7 million homes sold annually
In 2007: Roughly 5 million homes sold annually
Through all of 2008, though, Existing Home Sales volume has been essentially flat. Some months up, some months down, but always hovering near the 5 million unit mark.
The data from September is no different.
For the 13th consecutive month, the number of home resales nationwide straddled the 5 million benchmark, clocking in at 5.18 million units. This tells us that everyday Americans are still buying and selling real estate at a fairly steady clip -- despite what the news keeps telling us.
Versus August, September sales volume grew by 5.5 percent.
Now, couple this two other data points and we can see that the housing market is showing multiple signs of strength:
The national home supply is now down to 9.9 months
Again, though, statistics are what you make of them. Just as there are positive signals about real estate, there are negative ones, too. The credit markets are one example of that.
But, either way, with a full year of stable sales volume behind us and stories of recovery in beat-up markets like California, we can't ignore the idea that housing may be done trolling its bottom.
It takes willing buyers and willing sellers to turnaround a market. It appears that housing may have both.
For its last move in 
Mortgage markets are like any other market -- in order for goods to change hands, a buyer and a seller must first reach an agreement to "trade" at a specific price point. 
It's well-known, but worth repeating. 
With home prices falling across most parts of the country, investors in real estate are finding good value in certain rental properties. Unfortunately, they're also finding it harder to get approved for a home loan.
In late-November, the Federal Reserve pledged 
During the holiday season, retailers bombard shoppers with at-the-register offers to "open a charge card and save 15%". 
When it comes to mortgage rates, sometimes it's better to "act now". 
The Federal Open Market Committee adjourns from its 2-day meeting at 2:15 P.M. ET today. 
Lock manufacturer Kwikset recently introduced its SmartCode series, a keyless entry system to replace existing door hardware.
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A mortgage is a contract between a lender and borrower, defining the terms by which a home loan must be repaid. 
It's the age-old question for home buyers in need of a mortgage:
For most Americans, mortgage interest paid on a home loan 
Earlier this year and under pressure from the government, mortgage lenders made more than 200,000 loan modifications to delinquent homeowners.
According to the government, American businesses are cutting staff at an accelerated pace, most recently 
For the 78th consecutive day, gas prices fell nationwide yesterday. At $1.81 per gallon, the average price at the pump is less than half what it was at its peak in July.
Each Wednesday, the Mortgage Bankers Association releases its 
The day after Thanksgiving is a busy shopping day nationwide and, this year, analysts are paying extra attention to sales figures.
Like everything else on Wall Street, mortgage markets are based on supply and demand. When demand outweighs supply, mortgage rates fall.
In real estate, the term existing home refers to a "used" property; one that can't be classified as new construction.
Business television and newspapers have made deflation a hot topic this week and, since Monday, Google has tracked 
. 
If the presence of inflation causes mortgage rates to rise, then the absence of inflation should cause mortgage rates to fall. And, in most markets that's true.
In March 2008, HUD temporarily raised FHA loan limits around the country. Effective January 1, 2009, FHA loan limits revert.
For the 4th consecutive year, the government has set the conforming mortgage loan size limit at $417,000.
On the first Friday of every month, the Bureau of Labor Statistics releases its Non-Farm Payrolls report. 
The interest rate against which adjustable-rate mortgages change is falling -- evidence that the global banking system is starting to stabilize.
The Federal Reserve confirmed what most of us already knew -- getting qualified for a "prime mortgage" is increasingly more difficult.
More than a handful would-be home buyers stayed on the sidelines this year, waiting for Election Day to pass. 
When the government nationalized mortgage lending in September, housing analysts predicted lower mortgage rates.
The Federal Open Market Committee adjourns from its 
Despite turmoil on Wall Street, the housing sector continues to deliver good news. 
Now that you've replaced your home's energy-hogging light bulbs with compact fluorescent ones, meet the next wave of environmentally-friendly home lighting -- LED.
Statistics are what you make of them, but sometimes, they can provide good perspective.
According to