Archive for the ‘Information for Buyers’ Category

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!

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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

To the borrowing public, lower interest rates generally mean a reason to refinance. Astute borrowers take advantage of low interest rate environments. What is the best plan for attacking a rate friendly market? The following facts are value added for anyone looking to refinance their current home mortgage in 2011.

1. Know Your Value: The number one reason home refinance loans are being rejected is that the appraisal of the clients home didn’t come back as anticipated. Basically, for a lender to refinance your home, there must be a certain level of equity in the transaction to make the scenario work. Otherwise, your refinance scenario may not be approved. Your knowledgeable Weichert Financial Gold Services Manager can help you understand the value and equity in your current home and how to make the transaction work.

2. Dig Up Your Documents: Make sure you have all necessary documents to avoid delays. This includes a copy of your current mortgage statement, current paystub showing year to date earnings, last year’s IRS tax returns (last two years if self-employed), and two forms of personal identification (one must be a government issued photo ID). Other documents may be required as well. If you don’t have these items, it will slow down the process, cause delays, and possibly cause you to miss this low interest rate window.

3. Choosing The Best Product: First off, you have to decide whether you are looking to reduce your payment or whether you are looking to reduce the term of your loan (or possibly both). A higher rate 30 year loan refinanced into a lower rate 30 year loan will reduce your payment. A higher rate 30 year loan refinanced into a lower rate 20 year, 15 year, or 10 year loan may keep your payment somewhat static, but will cut significant years off the duration of your loan and save years of interest (same with a 20 year into a 15/10, or a 15 year into a 10 year). Which scenario is best for you? Again, our knowledgeable Weichert Financial Gold Services Manager can help analyze what is best.

Not many in the markets expected rates to be this low again in August (or in 2011, for that matter). Did you miss the last refinance wave in 2010? Let’s not miss this one.

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

Should the markets have reacted like they have on the news of a Sovereign US downgrade? Fear sparks unexpected emotions. The downgrade, which was more of a warning to the US to get their finances in order, should have been perceived as nothing more than that. The difference between AAA and AA+ is like splitting hairs. France is AAA and their per capita debt load is significantly larger than ours is. This was more of a “straw that broke the camel’s back” scenario (worries of a double dip recession, concerns over fiscal issues in Europe, digesting what the debt ceiling agreement really means). The reaction to the downgrade (and all global news) appears overblown.

Shouldn’t rates have increased on the downgrade news instead of rallied? In a textbook economic world, absolutely. But the textbooks are obsolete, given the fact that Fixed Income rallied, further supporting the thesis that the downgrade was more scope then substance. Remember, S&P is also the rating agency that rated billions of Subprime paper as AAA, so strength and security is in the eye of the beholder. And if action rings true, the significant rally in Fixed Income solidified the fact that the US debt (Treasuries and Mortgage Backed) is as strong as ever as buyers came in in droves looking for a safe haven.

Mortgage Rates have free-fallen and the Fed came in Tuesday afternoon and said Fed Funds rates would be low “until mid 2013”. What does that mean? Do we go lower? The statement was more of a symbol to support the market then anything. Most of us already thought the Fed Funds would be low for a while longer anyways. But make no mistake – low Fed Funds rates til “mid 2013” does not necessarily equate to low mortgage rates in the same time period. For now, rates are back down at the historical lows of last year. However, alternate forces (Fannie/Freddie/FHA increasing fees, inflation, a pick up in the economy, buyers looking for alternate/higher yielding investments) all could send mortgage rates back up at some point in the future despite where the Fed Funds rate are as the curve could potentially widen, which we have seen in the past.

What to do? Housing is historically affordable and mortgage rates are historically low. Looking to purchase? Missed your 2010 opportunity to refinance? Weichert Financial can help!  Ask me how and capitalize today.

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

With part one of the debt ceiling crisis behind us (albeit the story is not finished yet), there has been a lot of economic events over the past couple of weeks that have made the global markets very nervous and volatile…with a freefall in interest rates being the benefactor.

Some of the events:

• With a flair for the dramatic, an accord to come to terms on expanding the US Debt Ceiling and a move towards cutting costs and balancing the budget came with a few hours to spare on Tuesday. However, the story continues: what cuts will be made, and how much will those cuts drag on the economy? Will the US lose its global AAA sovereign debt rating, and what will that mean for Treasury, Mortgage Backed Security, and Corporate borrowing costs?

• The Yen depreciated about 4% against the dollar Thursday morning, sending the Global Equity markets into a further tailspin. The Bank of Japan also announced an additional 10 billion Yen to its Y40 billion Yen asset-purchase program to limit the damage of the country’s rising currency on the export-driven recovery in the wake of the devastating earthquake and nuclear disaster earlier this year.

• The European Central Bank resumed bond purchases and offered banks more cash to stem the spread of the debt crisis and to calm the ongoing woes related to Greece, Ireland, Spain, and Portugal.

• QE3 talk on the horizon – The Fed is rumored to be considering a new round of security purchases to spur the economy if growth and employment keep languishing and inflation recedes

So what is the bi-product of all this shaky economic news? Rates have fallen to the lowest levels of the year, with 30 year mortgages in the low 4% range, 15 years in the mid 3% range, and 5/1 hybrid ARM’s with a 2 handle interest rate. Will these rates be short lived, with the prospect of a US Sovereign Debt downgrade on the horizon? Whether purchasing or refinancing, the time to act has never been better.

This month’s newsletter features articles on:

Attention Home Shoppers

When it comes to buying a property, the “good old days” are here again!  The National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) announced that nationwide housing affordability during the first quarter of 2011 rose to its highest level in the more than 20 years since it started being measured.

Inviting Inspiration

Whether you’ve just moved into your very first home and you’re working with a blank canvas, or you’re redecorating your home for the fifth time, coming up with decorating ideas can be a challenge.

Going Local

You may have heard the adage that “every market is different.”  But do you know why? Here’s a look at just a few of the may factors that make very real estate market unique.

Mind the Gap

Ideally, you’d always be able to coordinate your closings so that you sell one home and buy the next on the same day.  But things don’t always go so smoothly.  So what do you do when your closings don’t line up?

Reno Recoup

If you’re considering doing any major outdoor renovations this summer, remember: some projects are better bets than others in terms of recouping expenses when you sell your house.

Read this month’s newsletter here.

According to the Environmental Protection Agency, nationwide more than 7 billion gallons of water a day go to landscape irrigation. Aside from that being a lot of water, as much as half of it is wasted because it falls on sidewalks or evaporates into the air before it reaches the ground.

Luckily, a few simple changes can help you save a precious resource and lower your bills.  HouseLogic recommends that homeowners think of the acronym DIRTS (drip  irrigation, recapture, timers and sensors) in order to remember steps to take for  saving water and money while still maintaining a great-looking yard.

• Drip irrigation systems are long, thin plastic tubes with small fittings that  release water, allowing you to send water only where you need it. A new drip system costs around $200 for a whole yard, or you can convert your existing in-ground sprinkler system. The cost is well worth it: Going from sprinklers to drip irrigation can cut lawn water use by up to 50 percent.

• Recapturing rainwater allows you to irrigate at no cost. To harvest rainwater, place a simple plastic or wooden drum, with a spigot near the bottom where you can attach your hose, underneath a downspout. A 60- gallon barrel costs only $75 to $150, and one inch of rain on a 1,000- square-foot roof provides 600 gallons of runoff.

• Putting your irrigation system on a timer will keep water waste to a minimum and can also help you comply with any local watering restrictions. Timer kits range from the simple to more sophisticated ones with sensors that adjust the water flow based on how much rain has fallen.

By Tim McLaughlin, Senior Vice President, Weichert Financial Services

Tuesday, August 2nd is the expiration of the current “debt ceiling” limitations, and with under five days remaining to get a new agreement in place, the market continues to get more and more nervous about the potential repercussions with Congress and the President continuing to have multiple proposals by no clear cut solution.

There are two main issues surrounding the debt ceiling crisis. First is the issue of potential default (or delayed payment) by the US government on its obligations. Obviously if the government doesn’t have the funds to make payments, it needs to borrow funds. If the debt ceiling is not increased, it has no ability to do so. The second issue is the possibility that S&P and/or Moody’s would downgrade sovereign US debt, which could have a ripple effect in our financial system.

At the root of the debt ceiling debate is the massive budget deficit (currently about $4T/yr). The pace at which we reduce the budget deficit will directly impact the pace of future debt ceiling increases. The rising Debt to GDP ratio is one of the primary causes of potential ratings downgrade.

Clearly the best case scenario is for Congress to quit the ongoing political game of chicken and come up with a plan to reduce the budget deficit and increase the debt ceiling. If they do NOT do so by the August 2nd deadline, does that mean there will be a default? Technically, the government could hold back (delay) payment of operating expenses, such as Social Security, Medicare, or government contracts. While this might not technically be considered a default, it is most certainly a very dire circumstance that could be met with a downgrade of debt ratings.

If Congress doesn’t raise the debt ceiling in time, is there anything the President can do? Some experts say that Obama can unilaterally raise the debt ceiling under the 14th Amendment of the Constitution, citing the validity of the nation’s public debt “shall not be questioned.” Even if this is possible, it would clearly only be a short term fix and doesn’t address the underlying issue.

Could the US just print more money to pay its bills? They could….but it would just further devalue the currency and cause more domestic inflation. As such, this is not a long term solution, and doesn’t mitigate the risks of a ratings downgrade.

The biggest focus for us is what will this do to a volatile market environment over the next few days/week? A default and/or downgrade could have impactfully negative consequences on interest rates, particularly mortgage rates. Additionally, what would this do to the Equities markets, which in turn impacts both the employment sector and consumer confidence.

Expect choppy market conditions over the next week or so.