So, you’ve been searching for that perfect house to call a ‘home,’ and you finally found it! The price is right, and in such a competitive market, you want to make sure that you make a good offer so that you can guarantee that your dream of making this house yours comes true!
Freddie Mac covered “4 Tips for Making an Offer” in their Executive Perspective. Here are the 4 tips they covered along with some additional information for your consideration:
1. Understand How Much You Can Afford
“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”
This ‘tip’ or ‘step’ should really take place before you start your home search process.
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).
2. Act Fast
“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”
The inventory of homes listed for sale has remained well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of...
By James Brooks
The bond market is down 8/32 (2.41), which should push Raleigh Area mortgage rates higher by approximately .125 of a discount point over Monday?s rates.
Yesterday?s 10-year Treasury Note auction did not go well with several benchmarks pointing towards a weak level of investor demand. The bond market weakened after results were posted, causing some lenders to revise mortgage rates upward before the end of the day. This doesn?t allow us to be too optimistic about today?s 30-year Bond auction either. Results will be posted at 1:00 PM ET this afternoon. If it also goes poorly, we could see bonds weaken again and another round of upward rate revisions shortly after. On the other hand, if there is a strong demand in the sale, bonds and mortgage rates may improve slightly before the end of the day.
Today?s only relevant economic release was an important one. November's Producer Price Index (PPI) was posted at 8:30 AM ET, revealing a 0.4% rise in the overall reading and a 0.3% increase in the more important core data. Analysts were expecting to see the 0.4% in the overall reading, but forecasts were calling for only a 0.2% rise in the core data. The core reading is the more important of the two because it excludes more volatile food and energy costs, giving us a more stable inflation picture in the manufacturing sector of the economy. Therefore, the core reading makes the news negative for bonds and mortgage rates.
Tomorrow is expected to be a very active day for the markets and mortgage rates. It will start with the release November's Consumer Price Index (CPI) at 8:30 AM ET. This is the sister release to today's Producer Price Index, except it tracks inflationary pressures at the important consumer level of the economy. It is expected to show a 0.4% rise in the overall reading while the core data is forecasted to show a 0.2% increase. This data is one of the most watched inflation indexes, which is extremely important to long-term...
In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.
Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.
Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:
“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”
One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”
Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:
- Capacity: Your current and future ability to make your payments
- Capital or cash reserves: The money, savings, and investments you have that can be sold...
By James Brooks
The bond market is up 1/32 (2.39), which should keep Raleigh area mortgage rates unchanged.
Today has no relevant economic data for the markets to digest, but there is an afternoon event that may affect mortgage rates. That would be the first of this week?s two Treasury auctions that carry the potential to influence rates. 10-year Notes will be sold today while 30-year Bonds go tomorrow. Results of both auctions will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, particularly international buyers, we should see strength in the broader bond market and improvements to mortgage pricing during afternoon hours. On the other hand, a weak interest in the securities could lead to an upward revision to rates.
Besides the 30-year Bond auction, tomorrow also has an important economic release. November's Producer Price Index (PPI) will be posted at 8:30 AM ET tomorrow morning. It shows inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. If it reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively. That would drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market could respond by pushing mortgage rates slightly lower. Analysts are expecting a 0.4% increase in the overall index and a 0.2% rise in the core data.
Overall, Wednesday is the key day of the week due to the release of November?s Consumer Price Index (CPI) followed by the FOMC meeting adjournment, Fed economic projections and press conference. The calmest day could be Friday. This week is probably going to be another active week for the markets and mortgage pricing....
By James Brooks
The bond market is down 3/32 (2.37%), which with yesterday?s afternoon weakness should cause Raleigh area mortgage rates to be slightly higher than Thursday?s morning pricing.
November's Employment report was posted at 8:30 AM ET this morning. It gave us several important readings on the employment sector, showing that the unemployment rate remained at 4.1% last month and that 228,000 new jobs were added to the economy. The unemployment rate matched forecasts but the payroll number was higher than expected (190k). There were also some revisions to October and September?s numbers, but the net difference over the two months was only 3,000 jobs and not relevant today. Still, this news only helped support the consensus that the Fed is going to raise key short-term interest rates next week.
The good part of the report was average earnings data. Analysts were expecting to see a 0.3% rise in earnings while today?s report revealed only a 0.2% increase. More good news came in a 0.1% downward revision to October?s earnings reading. The weaker than predicted earnings data eases inflation concerns that erode investor value in bonds. This news is preventing a negative reaction in the bond and mortgage markets.
Also released this morning was December's preliminary reading to the University of Michigan's Index of Consumer Sentiment. The 10:00 AM ET release showed a 96.8 reading that fell short of last month?s 98.5. That means that surveyed consumers were less optimistic about their own financial situations than thought. Forecasts were calling for a slight increase in sentiment. Because waning confidence usually translates into weaker levels of consumer spending, this reading was good news for bonds and mortgage rates.
Next week brings us the release of several important economic releases in addition to the last FOMC meeting of the year, which will also include revised economic projections and a press conference with Chair Janet Yellen. There is...
Many people believe that selling their house during “the spring buyers’ market” is the best thing to do. Their reasoning is that there will be more buyers than there are during the winter months and, therefore, their house will sell quicker and for a higher price.
Historically, this made sense. However, today’s real estate market is not following the rules of the past.
The National Association of Realtors (NAR) measures buyer “foot traffic” each month. It receives data on the number of properties shown to a prospective purchaser by a Realtor® (based on the number of lockboxes used). The data reveals the number of buyers out actively looking for a home, not just window shopping on the internet. NAR explains:
“Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future.”
According to the latest Foot Traffic Report, buyer traffic is greater now than it was during this year’s spring market and there are more buyers out now than at any other time in the last five years (March of 2012).
The chart below shows that buyer activity over the last three months (blue bars) was greater than it was during this past spring market (green bars).
If you are waiting for next spring to list your...
By James Brooks
The bond market is currently up 6/32 (2.34%), we should a slight improvement in Raleigh area mortgage rates.
Last week?s unemployment update was posted early this morning, revealing that 236,000 new claims for unemployment benefits were field last week. This was a small decline from the previous week?s 238,000 initial filings. Since analysts were expecting to see an increase in claims, we can consider this data bad news for mortgage rates. Fortunately, this is only a weekly snapshot, so its impact on today?s trading has been minimal.
Tomorrow closes the week with two economic reports scheduled, one of which is extremely important to the markets. That key release is November's Employment figures at 8:30 AM ET. This is arguably the most important monthly report we see, so its impact on the markets and mortgage rates is often significant. It is comprised of many statistics and readings, but the most watched are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for no change in the unemployment rate of 4.1% while 190,000 new jobs were added to the economy. The income reading is forecasted to show an increase of 0.3%. An ideal scenario for mortgage shoppers would be a higher unemployment rate, a much smaller increase in payrolls (or a decline) and no change in the earnings reading. That scenario should cause bond prices to rise sharply and mortgage rates to move much lower tomorrow. However, stronger than expected readings would likely fuel a bond sell-off that would lead to higher mortgage rates.
Also worth noting is that extra attention will be given to this month's Employment report because it is the last one before this month FOMC meeting. It is at this meeting that many analysts and market participants expect the Fed to push key short-term interest rates higher by a quarter-point. If this report meets or exceeds expectations, it is highly likely that the Fed will...
According to CoreLogic’s latest Home Price Index, national home prices have appreciated by 7.0% from October 2016 to October 2017. This marks the second month in a row with a 7.0% year-over-year increase.
A lack of supply of homes for sale has led to upward pressure on home prices across the country, especially in areas where both existing and new home inventory have not kept up with buyer demand.
CoreLogic’s Chief Economist Frank Nothaft elaborated on the significance of such a large year-over-year gain,
“Single-family residential sales and prices continued to heat up in October. On a year-over-year basis, home prices grew in excess of 6 percent for four consecutive months ending in October, the longest such streak since June 2014.
This escalation in home prices reflects both the acute lack of supply and the strengthening economy.”
This is great news for homeowners who have gained over $13,000 in equity in their home over the last year! Those homeowners who had been on the fence as to whether or not to sell will be pleasantly surprised to find out that they now have an even larger profit to help cover a down payment on their dream home.
CoreLogic’s President & CEO Frank Martell had this to say,
“The acceleration in home prices is good news for both homeowners and the economy because it leads to higher home equity balances that support consumer spending and is a cushion against mortgage risk. However, for entry-level renters and first-time homebuyers, it leads to tougher affordability challenges.”...
By James Brooks,
The bond market is up 10/32 (2.31%), which should improve Raleigh area mortgage rates by approximately .250 of a discount point.
The first of today?s two economic releases was the ADP Employment report for November at 8:15 AM ET. It estimates that 190,000 new private-sector jobs were added to the economy last month. This was nearly a match to forecasts, indicating moderate growth in the employment sector. Because there was no surprise in this data and the more reliable monthly government report is coming Friday, we haven?t seen much of a reaction to it in the markets or mortgage pricing.
Also released early this morning was revised 3rd Quarter Productivity numbers that revealed worker productivity rose at a 3.0% annual rate. This was unchanged from the initial estimate and down from the 3.3% that was expected. In this data, good news would have been an upward revision. However, we did get some very favorable news in the Unit Labor Costs reading within the data. This reading, that tracks employer costs for wages and benefits, showed a sizable downward revision (+0.5% to -0.2%). The downward adjustment eases wage-inflation concerns that heavily contributes to broader inflation growth and makes bonds less attractive to investors. While the productivity reading is neutral, the labor cost reading is definitely good news for mortgage rates.
Tomorrow?s only relevant release will be last week?s unemployment figures at 8:30 AM ET. They are expected to show that 240,000 new claims for unemployment benefits were filed last week, up a little from the previous week?s 238,000 initial claims. Since rising claims hints at employment sector weakness, the higher the number the better the news it is for mortgage rates. However, because this is only a weekly report, it likely will have little impact on tomorrow?s mortgage rates unless it shows a significant variance.
We will get the extremely important monthly Employment report early Friday morning. This is a major piece...
Why is there so much paperwork mandated by the lenders for a mortgage loan application when buying a home today? It seems that they need to know everything about you and requires three separate sources to validate each and every entry on the application form.
Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.
There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.
1. The government has set new guidelines that now demand that the bank proves beyond any doubt that you are indeed capable of paying the mortgage.
During the run-up to the housing crisis, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again.
2. The banks don’t want to be in the real estate business.
Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.
However, there is some good news in the situation.
The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate around 4%.
The friends and family who bought homes ten or twenty years ago experienced a simpler mortgage application process, but also...
By James Brooks
The bond market is down 2/32 (2.39%), which should keep Raleigh area mortgage rates unchanged.
There is nothing of importance set for release today, so if we see an intraday move in mortgage rates it likely will be a result of strength or weakness in stocks. As long as stocks remain near current levels, we should see mortgage rates follow suit.
Tomorrow has two pieces of economic data that we will be watching. The first is the ADP Employment report for November at 8:15 AM ET, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs of the company's clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on this week's calendar. Analysts are expecting to see 190,000 new private-sector payrolls last month.
The second report of the day will be revised 3rd Quarter Productivity numbers at 8:30 AM ET. This index is expected to show a small upward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn't necessarily bad for the bond market. It's the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate in productivity of 3.3%, up from the previous estimate of 3.0%. The higher the reading, the better the news for the bond market. Although, this report generally does not have a noticeable impact on mortgage pricing, so it will take a wide variance to draw much attention.
If I were...
Here are five reasons listing your home for sale this winter makes sense.
1. Demand Is Strong
The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home.
Take advantage of the buyer activity currently in the market.
2. There Is Less Competition Now
Housing inventory is still under the 6-month supply that is needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon.
Historically, the average number of years a homeowner stayed in their home was six, but has hovered between nine and ten years since 2011. There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.
The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.
3. The Process...
By James Brooks
The bond market is down 6/32 (2.38%). Which should increase Raleigh area mortgage rates by .125 of a discount point
October's Factory Orders report was posted at 10:00 AM ET today, giving us some manufacturing information. The Commerce Department announced a 0.1% decline in new orders at U.S. factories. Usually, a decline would be good news as it points towards a softening manufacturing sector. That?s not the case in today?s release because analysts were expecting to see a 0.4% decline, meaning activity was a bit better than expected.
The remainder of the week has four more economic reports scheduled that have the potential to affect mortgage rates. One of those, Friday?s monthly Employment report, is considered to be a major release that can heavily influence the financial and mortgage markets. This week?s data, along with the tax reform, Russia investigation and other events out of Washington, make it likely that we will have another active week for mortgage rates.
Tomorrow has nothing of importance set for release, so expect political news and any surprises on tax reform that may derail the final approval to drive bond trading and mortgage rates. Wednesday had two reports early in the morning that the markets will be watching (ADP Employment and revised 3rd Quarter Productivity numbers).
Overall, Friday is the most important day of the week due to the release of the monthly Employment report. We saw a very volatile end of the week last week and this week shouldn?t be much different. Therefore, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now.
By James Brooks
The bond market is up 3/32 (2.38%), but we still should see an increase in Raleigh area mortgage rates of slightly less than .125 of a discount point. This is because Today's positive reaction is not quite as strong as yesterday?s negative move.
We saw bonds tank yesterday afternoon as rumors spread that the Senate was going forward with a tax reform vote. Since it appeared there was enough support for it to pass, the bond market reacted negatively. Then, as we have seen many times with political-related swings, the outlook changed last night. The consensus swung to the opinion it may not pass in its current form after all. We saw a good part of yesterday?s negative move unwind during overnight trading, causing a positive open for the bond market this morning. It is still being reported that a vote may take place today, so this volatility may not be over with yet and we could still see another mortgage rates revision before the end of the day.
Today?s only important economic release was November's Institute for Supply Management?s (ISM) manufacturing index at 10:00 AM ET. It came in at 58.2, down from October?s 58.7 but nearly matching expectations. The decline means fewer surveyed manufacturing executives felt business conditions improved during the month than did last month. Because that is a sign of slower manufacturing activity, it is technically good news for bonds and mortgage rates. However, since it didn?t reveal a surprise reading either way, it has had little influence on Today's mortgage pricing.
Next week has a couple of things that may heavily influence mortgage rates, including the highly important monthly Employment report. Compared to this week, there is much less being released or taking place, but we still should see plenty of movement in the markets and mortgage rates. The week does have something happening Monday- the release of October?s Factory Orders report. This is only a moderately important release.
If I were considering financing/refinancing...
By James Brooks
The bond market is down 6/32 (2.42%), which should increase Raleigh area mortgage rates by .125 of a discount point.
Yesterday afternoon?s release of the Fed Beige Book didn?t reveal many surprises. It indicated modest to moderate economic growth throughout the Fed?s 12 regions. What did draw some attention were notes of price pressures rising since the previous update. Inflation has been subdued with the Fed repeatedly predicting it will eventually get to its preferred threshold of 2.0% annually. Rising inflation makes long-term securities such as mortgage-related bonds less attractive to investors and causes mortgage rates to rise instead of falling. Yesterday?s news didn?t have much of an influence on mortgage rates, but it does put us on alert for the next update.
There were two economic reports posted this morning, both at 8:30 AM ET. The Commerce Department gave us October's Personal Income and Outlays data that showed a 0.4% rise in income while spending rose 0.3%. Analysts were expecting to see a 0.3% increase in both, meaning the income reading that give consumers the ability to spend, was stronger than thought. That makes the report neutral to slightly negative for mortgage rates, especially since the inflation readings pegged forecasts.
Last week?s unemployment update was also released. It revealed that 238,000 new claims for unemployment benefits were filed last week. That was down slightly from the previous week?s revised 240,000 initial filings, but matched expectations. Because this is only a weekly snapshot of the employment sector and did not reveal a significant variance, it has also had little impact on today's mortgage pricing.
The week?s calendar closes tomorrow with an important manufacturing report. November's Institute for Supply Management?s (ISM) manufacturing index will be posted at 10:00 AM ET tomorrow. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Current forecasts call for...
According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.92%, which is still near record lows in comparison to recent history!
The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.
Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.
The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments between $1,850-$1,900 a month.
With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be closer to 5% by this time next year.
Act now to get the most house for your hard-earned money.
By James Brooks
The bond market is up 5/32 (2.31%), which should improve Raleigh area mortgage rates by approximately .125 of a discount point.
Yesterday?s 5-year Treasury Note auction was uneventful with the indicators pointing towards and average or slightly better demand for the securities. The bond market had little reaction to the news when results were posted at 1:00 PM ET yesterday. However, it does allow us to be a little optimistic about today?s 7-year Note sale. If it is met with a strong investor demand, we could see bond prices improve slightly this afternoon. Results will again be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.
Today?s sole piece of economic data was November's Consumer Confidence Index (CCI) at 10:00 AM ET. The Conference Board announced a reading of 129.5 that exceeded forecasts and October?s revised 126.2. It was the highest reading since November 2000, meaning consumer confidence in their own financial and employment situations is at its best levels in a long time. That is bad news for bonds and mortgage rates because rising levels of confidence usually translate into stronger consumer spending that fuels economic growth. Fortunately, this is only a moderately important report that hasn?t had much of an impact on today?s trading.
Tomorrow is a pretty busy day in terms of scheduled events that may affect mortgage pricing. It begins with the first revision to the 3rd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. This release is expected to show an upward revision to last month's preliminary reading of a 3.0% annual rate of growth. The GDP measures the total of all goods and services produced in the U.S. and is considered to be the benchmark measurement of economic growth. Current forecasts call for a 3.2% rate, meaning that there was a tad more economic activity during the third quarter than previously thought. This would be bad news for the bond market and mortgage rates because strengthening economic growth makes bonds less appealing...
Owning a home has great financial benefits, yet many continue to rent! Today, let’s look at the financial reasons why owning a home of your own has been a part of the American Dream for as long as America has existed.
Zillow recently reported that:
“In reality, buying or renting a home is an intensely personal decision, with emotional and even financial considerations that go beyond whether to invest in this one (admittedly large) asset. Looking strictly at housing market numbers, there is a concrete point at which buying a home makes more financial sense than renting it.”
What proof exists that owning is financially better than renting?
1. We recently highlighted the top 5 financial benefits of homeownership:
- Homeownership is a form of forced savings.
- Homeownership provides tax savings.
- Homeownership allows you to lock in your monthly housing cost.
- Buying a home is cheaper than renting.
- No other investment lets you live inside of it.
2. Studies have shown that a homeowner’s net worth is 44x greater than that of a renter.
3. Just a few months ago, we explained that a family that purchased an average-priced home at the beginning of 2017 could build more than $48,000 in family wealth over the next five years.
4. Some argue that renting eliminates the cost of taxes and home repairs, but every potential renter must realize that all the expenses the landlord incurs are already baked into the rent payment– along with a profit margin!!
Owning a home has always...