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by Tim McLaughlin, Senior Vice President, Weichert Financial

On Wednesday, Federal Reserve policy makers raised their assessment of the economy while saying “significant downside risks” remain and refrained from taking any additional steps to ease monetary policy.

“Economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year,” the Federal Open Market Committee stated after a two day meeting. At the same time, it repeated that “there are significant downside risks to the economic outlook, including strains in global financial markets.”

The statement may reflect the desire of policy makers led by Chairman Ben Bernanke to see if the unconventional policy steps unveiled at their last two meetings help the expansion gain strength before embarking on new initiatives. While the economy grew last quarter at the fastest pace in a year, that is still insufficient to push down the unemployment rate, and officials have said the U.S. remains vulnerable to shocks from the European debt crisis.

The Fed left unchanged its pledge to keep the benchmark interest rate near zero through at least mid-2013 as long as unemployment remains high and the inflation outlook stays “subdued.” The central bank has kept the target federal funds rate in a range of zero to 0.25 percent since December 2008.
“The committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools to promote a stronger economic recovery in a context of price stability,” the statement said.

The central bank also said it would continue its plan to purchase $400 billion of longer-term U.S. bonds by June 2012 while selling the same amount of short-term debt, a program known as Operation Twist. It also will continue reinvesting proceeds from housing debt into mortgage backed securities.

From a market perspective, investors viewed this as a “no change/stay the course” announcement, and all eyes in the mortgage sector continue to focus on the events in Greece/Europe, and on the impending HARP 2.0 release.

Secondary Marketing Takeaways: In terms of employment data, a mostly positive release for the economy this morning. Nonfarm Payroll numbers for the month were the only minor negative in the report (80K vs. projected 95K), however, last month was revised upwards 55K (from 103K to 158K). Additionally, the Unemployment Rate dropped to 9.0% from 9.1%, while Fed Chairman Ben Bernanke commented on Wednesday that we could be in the mid 8% range by 2Q12.

With only eight weeks left until the end of the year, the major market focuses for the mortgage sector are:

1) The resolution of the Greece debt crisis
2) The implementation of HARP 2.0 in December
3) If a broader MBS purchase program by the Fed comes to fruition in the coming months.

This month’s newsletter features articles on:

Good timing

With U.S. mortgage rates lower than they have been in decades, and homes in many areas offered for sale below previous market value, many people are viewing this as the perfect time to buy real estate.

A Place For Everything

Have you just moved into a new place and are loking for room for all of your belongings?  Are you having trouble accommodating all the things you’ve accumulated in your home throughout the years?  Whatever your reasons for wanting more storage space are, there are plenty of ways to get it  .

Holiday Shopping

If you think there’s little point to hunting for a new home during the holidays, think again.  The holiday season can yield some great deals for homebuyers willing to put in the effort at that time of the year.  Here’s why.

Price it Right

Pricing your home right is critical for a quicker sale.  To help prevent your property from lingering on the market longer than it needs to, avoid the following mistakes many seers unfortunately make when establishing their asking price.

It’s A Lock!

Gone are the days when sellers’ keys hung on pegs in real estate offices.  Today it’s sophisticated lockboxes that make your house accessible — and easier to sell.

Read this month’s newsletter here.

By Tim McLaughlin, Sr. Vice President, Weichert Financial

This was the headline of a great article that ran in the Wall Street Journal’s weekend section last week. For those of you who didn’t get a chance to see it, here is a synopsis.

• The nation’s ratio of house prices to yearly rents is nearly restored to its pre-bubble average, U.S. house prices have plunged by nearly a third since 2006, making it a terrific value proposition.
• Taking historically low mortgage rates into consideration, houses are the most affordable they have been in several decades.
• “Price to Rent” ratios are among the lowest since the 1960’s, with the combination of housing prices coming down and rents maintaining their price levels of 5 years ago (even increasing to some degree in some cases):

• The Philadelphia region tri-state price to rent ratio is reported at 11.6
• Washington/Southern MD/Northern VA is at 13.3 o The New York Metro Area is at 17.6
• All three of these regions are down significantly from where they were in 2005 to 2008
• Nationwide, the average is 11.3, down significantly from the peak of 18.5 according to Moody’s

• The numbers are quickly turning in the buyers favor: stock-oriented individuals can think of a house’s price/rent ratio in line to a stock’s price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

So how does the value conscience consumer capitalize on this? Your first step is to meet with your knowledgeable Weichert Realtor and your trusted Weichert Financial Gold Services Manager to strategize a plan and set your course of action. With the buy vs. rent equation never being more in your favor, coupled with near historically low interest rates, the time to capitalize is now. Ask me how…I can help!

By Tim McLaughlin, Sr. Vice President, Weichert Financial

Rates are near historical lows. Housing prices haven’t been this affordable in years, So what are the top reasons supporting the fact that it is a great time to buy that home you have had your eye on (according to the WSJ)?

1. You can get a great deal = buyer’s market. Many of the summer 2011 buyers have purchased or are waiting for spring 2012. An excellent time to beat them to the punch and grab that house of your dreams.

2. Mortgages are cheap. You can get a 30 year loan in the high 3%/low 4% range. What’s not to like? These are the lowest rates on record. As recently as three years ago they were about 6.25%. That drop slashes your monthly repayment by a fifth. When the economy and employment do recover, it is a fair bet that you won’t see these mortgage rates again in your lifetime.

3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains down the line when you sell.

4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension, or paint everything bright orange if you so desire.

5. You’ll get a better place to live. In many parts of the country right now, it can be really hard to find a good rental given the glut of renter in the marketplace.

6. It offers some inflation protection. No, it’s not perfect. But studies by Professor Karl “Chip” Case (of Case-Shiller), and others, suggest that over the long term housing has tended to beat inflation by a couple of percentage points a year. That’s valuable inflation insurance, especially if you’re young and raising a family and thinking about the next 30 or 40 years.

7. It is forced savings. If you can rent an apartment for say $2,000 month instead of buying one for say $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won’t. Most, I dare say. Thus where is the true value and the savings?

8. Weichert will help make the transaction seamless…ask me how!

by Tim McLaughlin, Sr. Vice President, Weichert Financial

The 30 year Fixed Rate mortgage, continuing to test new lows, dropped below 4% last week for the first time in modern history to 3.99% with .68 points during the week ending Oct. 6, according to Freddie Mac’s weekly survey. A spokesman confirmed that the 30 year’s average of 4.01% with .66 points last week was previously the lowest the weekly rate has been. Freddie has been following rates since its startup in 1970.

While the week to week drop below 4% is only a matter of two basis points, it marks a benchmark level that could have more of a psychological impact on borrowers who qualify for new loans and have a rate high enough to benefit enough from a refinance.

A year ago at this time, the average weekly 30 year rate was 4.27% and the average 15 year rate was 3.72%.
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Pew Research Center out of Washington conducted a survey of over 2,100 adults, of which 57% were current homeowners, 30% were renters, and 13% were prospective buyers, with some interesting results:

• 64% of homeowners whose homes lost value said they expect to recoup the equity losses in the next 3 to 5 years.
• 81% of homeowners (more than 4 out of 5) believe purchasing a home is the best investment an adult can make. By comparison, the number was at 84% back in 1991.

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Did you know?

Fiction: Credit scores can change only once per month or every 30 days.

Fact: On the contrary; each creditor reports information to each credit bureau at different times of the month. This will cause the information and potentially the credit scores to change on a daily basis. For example, American Express may report to Experian on the 1st of the month, Equifax on the 15th and Transunion on the 25th. Thorough review of the credit report is needed to determine what caused the score to change from report to report.

This month’s newsletter features articles on:

As One Door Closes, Another One Opens

In 2010, 37.5 million people changed residences in the U.S.  Of these, an estimated 43.7 percent of the movers cited housing-related reasons, such as the desire to live in a new or better home or apartment.

Say “Ahhhh…”

As life grows increasingly stressful, people are increasingly viewing their homes as retreats–and decorating them as such.  Bathrooms are often a primary focus, and the rend today is to design a space devoted to relaxing and rejuvenating.

Table Talk

Negotiating the purchase agreement is arguably the most challenging aspect of byiing a home, particularly in markets that favor sellers.  To strengthen your position at the negotiating table, consider this advice.

Show Ready

How you live in your home when it’s on the market is different from how you normally live in it.  If you’re serious about selling, you need to be prepared for buyers’ eyes at all times.

Stop Loss

Air leaks make your house a less comfortable place to live and a more expensive place to maintain.  Here’s how to spot leaks so that you can remedy them, and prevent money from floating out your windows.

Read this month’s newsletter here.

by Tim McLaughlin, Sr. Vice President, Weichert Financial Services

On Wednesday, the Fed put what is termed as “Operation Twist” into action. “Operation Twist” is a strategy enacted by the Federal Reserve to sell short term Treasuries while simultaneously purchasing longer term Treasuries. The Fed mandated that it would “swap” $400B of short term debt into longer dated securities.

The last time the Fed purchased long term Treasuries was back in the 1960s during the Kennedy administration. The project, started in 1961, was called “Operation Twist.” It was intended to lower long term interest rates (to stimulate investment) while propping up short term interest rates (to attract capital from abroad and support the dollar). Economists generally seem to think the experiment flopped, though Fed policy has changed so much between then and now, and the experiment was on such a small scale, that it’s hard to draw too many conclusions on how “Operation Twist” will fare today.

In addition to the $400B short/long swap, the Fed also announced that it would be reinvesting proceeds of the $1.25T Mortgage Backed Security purchase initiative from the last two years back into the MBS market as the securities pay off to further support the mortgage sector and continue to stimulate low interest rates.

What does this mean for interest rates and tocks? Well, we are two days in, and it has been bad news for Equities (combined with concerns of the European debt crisis) and very good news for Fixed Income Rates. The initial knee jerk reaction is warranted on the announcement. The question is will the momentum sustain for a prolonged period of time, or will the markets start to retrace as the global markets digest the news over the weekend?

For now, 3.99% and lower on a 30 year Fixed Mortgage sounds awfully appetizing. And 2.99% with points on a 15 year Mortgage sounds like the refinance opportunity everyone has been waiting for. Purchase or refinance, the opportunity to capitalize on historically low interest rates is right now. Weichert Financial can help…ask me how!

by Tim McLaughlin, Sr. Vice President, Weichert Financial

Equities and Fixed Income investments are delivering low (negative) returns, and home prices are at bargain levels. That has prompted a lot of would be investors to contemplate if the time is right consider buying investment properties for rental housing

As you would imagine, investing in real estate right now can be surprisingly profitable, if everything goes right. Rents are climbing in many areas, and more properties may be coming on the market. Last month, the Obama administration asked for proposals on how to convert some of Fannie Mae’s and Freddie Mac’s bulging inventories of foreclosed homes into affordable rentals.

Investors used to aim for rents that were 1% of the purchase price, or $1,000 a month for a $100,000 home, which equates to an annual gross return of 12%. Today in many areas, that has increased to 1.5% to 2%. However, average returns after taxes and expenses are more like 5% to 6% of the property value. But that is still well above what many other investments yield.

When investigating potential investment property purchases, avoid the following pitfalls:

• Confusing a cheap deal for a good deal – It is true that you can buy some homes for ridiculously low prices, but that doesn’t mean you can rent them out. Homes in deserted subdivisions aren’t appealing to renters or buyers in many cases. The same is true for less attractive properties or those in less desirable school districts.

• Forgetting that time is money – In real estate, time is not always on your side. You lose money when your property is empty, whether you are painting it or between tenants. Many times, you may be better off accepting a lower rent than waiting for a higher paying tenant.

• Assuming you will sit back and watch the rent roll in – When you become a landlord, you also become a rent collector. Just like homeowners who can’t pay the mortgage, tenants lose their jobs and stop paying the rent. Evicting them can sometimes take several weeks. There are extra steps such as upfront screening and pulling credit reports to see who is the “best credit risk” to rent your property, much like in mortgage lending.

• Knowing the area you are investing in – Is the town ripe for renters? Is it a commuter town that is more apt to have a high renter’s population? Does the town lend to a conducive renting environment. Don’t guess if it is or isn’t. Your knowledgeable Weichert Realtor can help with those questions and provide valuable insight to find the right investment.

• Financing your investment property… is often different then financing your own home. Weichert Financial can help you analyze the differences and make an educated decision. Ask us how!

This month’s newsletter features articles on:

Market Down?  Buy Up!

Property values are still down in many areas, causing some homeowners to feel they should just stay put until the housing market turns around.  Before you resign yourself to sitting and waiting until home values rise again, remember, while your house might not sell for as much as you expect in a “normal” market, the same thing also applies to your dream home.  Could now be the time to move “up” in the housing market?

A New Look For Less

It’s a new season; your tastes have changed. You and your significant other are moving in together.  There are many reasons why you might want to change the look of a room–or rooms–in your home.  But if budgetary concerns are keeping you from doing so, you’ll find solutions here.

Analysis Paralysis

Are you so overwhelmed by the home-buying process that you find yourself unable to move forward?  If so, you may suffer from buyer’s paralysis.  Luckily this condition can be cured.

Ready, Set, Move

Most buyers, especially first-time buyers, agree that finding a property in ‘move-in ready’ condition is important to them.  So, sellers, it’s time to roll up you sleeves and get to work.

Weathering the Storm

From high winds to heavy rains, this country is no stranger to extreme weather.  What can you do to help protect your home from storm damage?

Read this month’s newsletter here.

by Tim McLaughlin, Sr. Vice President, Weichert Financial Services.

If you are not still in the midst of a massive cleanup effort from the earthquake that rocked the Northeast last Tuesday (I already picked up the cup that knocked over on my desk), and if you have some free time while you are shut in this weekend from the negative effects of Hurricane Irene, now is a great time to pull out your laptop and run some numbers to see how truly affordable it is to finance that home of your dreams, or refinance your existing residence, if you haven’t already (that is, assuming you have power to run the computer). Let’s analyze some of the numbers.

• If you have a $300K, 30 year mortgage at say 4.99% (existing loan to Refinance or rate you would have gotten on a Purchase mortgage in 1Q11), your P&I payment would be ~$1,609. If you were Purchasing that same house today, or looking to Refinance that purchase from early 2011 or before, the P&I payment would be ~ $1,431, a savings of $178 a month, over $2,100 a year, and over $10,000 in just 5 years! A terrific opportunity to act now on both a Purchase and a Refinance.
• Or let’s say that you Purchased that same property in Q1 ($300K, 30 year mortgage at 4.99%), and now you wanted to refinance that mortgage into a 20 year mortgage at 3.99%. Your P&I payment would increase by $208 a month, BUT, you would cut 9 1/2 years off the life of your loan (assuming you originally closed in early 2011), and on the life of the loan payments, the interest saved in switching from the 30 year to a lower rate 20 year mortgage example above would be over $134,400 life of loan (assuming full term payments vs. a loan that originally closed in 1Q11).
• Let’s take another example which can apply to both Purchases and Refinances: Let’s assume you Purchased a house with a 30 year, $300K mortgage in August of 2008 at 6.5% (yes, those were the rates in mid-2008). Your P&I payment would be ~ $1,896 a month. Now it is three years later, and assuming no additional principal was paid, the loan amount would now be ~$289,252. If you Refinanced that loan into a 20 year mortgage at 3.99%, you would cut 7 years of payments off your loan AND, additionally, you would reduce your P&I payment to ~$1,752 a month, a monthly savings of $144 a month in addition to reducing the payment by 7 years. This scenario can work on 15 year and 10 year mortgages as well in many cases.

Don’t let the shaking earth, the sideways rain, and the howling winds get you down. The bright spot this weekend is we can help you analyze how to finance that new home at the cheapest rates in years, or save money on your existing mortgage by Refinancing. We will take the time to do it right and garner your trust. Ask us how…we can help…before the sun comes back on Monday!