Lending News of The Week – May 2, 2011

Posted on May 2, 2011 by georgia-loan-pro

>> Market Update 

QUOTE OF THE WEEK…“I see that the path of progress has never taken a straight line, but has always been a zigzag course.”–Kelly Miller, American sociologist

INFO THAT HITS US WHERE WE LIVE…Last week’s reports showed the progress of the housing market recovery is definitely on a zigzag trajectory. Zigging upward were new home sales, UP a strong 11.1% in March, hitting the 300,000 threshold annual rate. The supply of new homes dropped to 7.3 months and the inventory fell again, to its lowest level since 1967. Also zigging UP 5.1% were March Pending Home Sales, which measure contracts on existing homes and point to continued gains in existing home sales come April and May.

But the path to progress in the housing market recovery zagged downward in the pricing area. The FHFA index of prices for homes financed with conforming mortgages slipped 1.6% in February. The Case-Shiller index of home prices in the top 20 metro areas dropped 0.2% for February (seasonally adjusted). But observers were expecting a bigger decline. The good news for buyers is that home prices are now down to 2004 levels and there are phenomenal deals to be had in many markets. 

BUSINESS TIP OF THE WEEK…Don’t hire a person just to fill a position. Instead, evaluate candidates on their ability to contribute to the team you’re putting together to build your business.

>> Review of Last Week

THE MONTH ENDS STRONGLY…Once again, investors on Wall Street sent stock prices higher and the Dow Jones Industrial Average wound UP 4% for April, its best monthly gain since December. This happened in spite of the still slipping home prices covered above, plus a preliminary Q1 GDP reading of just a 1.8% annual growth rate. But consumer inflation is up only 1.8% versus a year ago and Core PCE prices, which exclude food and energy, came in just 0.9% up over the past year. Consequently, the Fed, as expected, kept the Funds rate at its rock bottom level coming out of their FOMC meeting on Wednesday.

That meeting was followed by the historic, first-ever press conference by a Fed chairman. Ben Bernanke used this event to tell the world he doesn’t see the need for any policy changes or a hike in the Funds rate. Investors approved of this steady-as-she-goes attitude from the Fed and were further buoyed by more good news on corporate earnings. Around 300 of the S&P 500 companies have now reported their Q1 earnings and 74% delivered upside surprises. Overall, corporate earnings are now forecast to go up 16% this quarter, way better than the original 11.5% estimate.

For the week, the Dow ended UP 2.4%, at 12,811; the S&P 500 was also UP 2.0%, to 1,364; and the Nasdaq was UP 1.9%, ending at 2,874.

Bond prices moved higher, reacting positively to the tame inflation report and the slowing economic recovery reflected in the lower GDP growth number. The price of the FNMA 4.0% bond we watch ended the week UP .97, closing at $99.17. Higher mortgage bond prices signal lower mortgage rates. Freddie Mac’s weekly survey showed national average rates for conforming mortgages at historically low levels, falling for the second week in a row. 

DID YOU KNOW?…The Pending Home Sales Index reported last week is based on sales that are under contract but have not yet closed. A score of 100 equals the level of contract activity in 2001, the first year data was compiled for the index. In March the index was at 94.1, up from 89.5 in February.

>> This Week’s Forecast

HOW’S BUSINESS? HOW’S JOBS?…From beginning to end, this week features answers to those two burning questions. Monday’s ISM Index for April is expected to show a slight slowdown in the growth of manufacturing, although the expected reading is still well above 50, indicating expansion. Wednesday’s ISM Services is forecast to show the same level of continued growth in that sector of the economy, which provides about 85% of our country’s jobs.

How the economy is doing creating those jobs will be reported in Friday’s Employment Report for April. Another 183,000 jobs are expected to be added, fewer than in March, but the unemployment rate should hold at 8.8%.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months…If anyone doubted it, Chairman Bernanke said it himself at last week’s historic press conference — rates will stay at their current rock bottom level “for an extended period.” Many economists are taking that to mean till the end of the year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on: Consensus
Jun 22 0%–0.25%
Aug 9 0%–0.25%
Sep 20 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Jun 22      <1%
Aug 9      1%
Sep 20      3%
Posted in Uncategorized | 1 Comment

HOME AND WEALTH

Posted on April 15, 2011 by georgia-loan-pro
Top Ten Tips for saving money in today’s economy…One good outcome of the economic recovery is that people are becoming more careful with how they spend their money. For many of us, this means acquiring new financial habits. Here are our Top Ten Tips for stretching a dollar today. The first four are good overall things to do:

1. Create a budget. Drawing up a budget may not be anyone’s favorite way to pass the time, but it sure pays off when it comes to saving money. You can’t cut expenses without knowing what you have coming in and how it’s going out. Making a budget instantly highlights the places where you might make some cuts. Without a budget, it’s hard to keep saving money over a long period of time, because you don’t see where your expenses may be going up.

2. Trim your debt. Credit cards are certainly convenient. But you want to minimize what you owe, as credit cards usually carry the highest interest rates. Watch what you spend with these cards–this is where that budget comes in–and make it a rule to pay off your outstanding balances each month. This can save you big money by eliminating those monthly interest charges. 

3. Spend less. Review what you spend on everything, and look for opportunities to save money. For example, check with your phone company for cheaper rates and cellular calling plans. Think about cutting out newspaper delivery or magazine subscriptions you don’t really need. Bring coffee to work in a thermos. Use the public library instead of buying books and renting movies. These things all add up–and the more you look for opportunities to save, the more you’ll uncover.

4. Save more. Get into the habit of regularly putting money away each week or each month. It doesn’t matter how small the amount, you can always increase it once you find yourself with more on hand from your other money saving efforts. Saving itself motivates you to keep at it, as you watch your nest egg grow. You might want to have a regular amount deducted from your paycheck and deposited directly into your savings account. Many people find this a painless way to quickly build up cash assets.

These next six tips give you some great specifics:

5. Buy in bulk. Plan meals in advance so you can take advantage of bulk savings. Cook in bulk so you have leftovers you can re-heat quickly when you’re in a hurry instead of using more expensive convenience foods. Buy fresh ingredients and generics for any prepared foods you need. But make sure what you buy in bulk will be used before it goes bad. Throwing food away doesn’t save you money.

6. Compare places to shop. Don’t assume big box superstores have the best prices. Check out farmer’s markets where buying direct from the producer can save money. Bulk buying can also work well here, letting you save on staples like corn, potatoes and rice. Local shops and smaller markets can also run specials that offer outstanding value–you just have to watch for ads and signs in windows.

7. Check sales carefully. Many “huge” mark downs are just creative marketing ploys–the items aren’t selling at the lowest price out there. Try to check out “sale” prices from a range of different sources. Especially with high ticket items, make sure the price you’re paying isn’t lower somewhere else.

8. Eat in. Have your beverages at home too. A take out cup of coffee can cost twenty times what it does to make at home. So think before you buy a soda or coffee or grab that fast food you don’t really need. Have something more nutritious at home and save money. Enjoy that nice meal out, of course, but that’s a special event, not an impulse purchase.

9. Consider buying used. Cars on average lose a third of their value in the first two years, so buying a car that’s twenty-four months old can save big money. Many items can be found “as good as new” in consignment shops, thrift shops and on the internet. The list is extensive: clothes, electronics, kitchen appliances, pots and pans, toys, gardening tools, musical instruments, outdoor sheds, to name a few. And you not only save money, you’re also preventing perfectly useful items from packing our landfills.

10. Reduce your consumption. In addition to buying used items, think about using fewer things overall. If we could all consume less, we’d create less waste, use less energy AND save money. Turn down the thermostat and turn off lights around the house. Don’t waste food. Don’t use more shampoo, detergent and household cleaners than you need to get the job done. You’ll be good to your wallet while being good to our planet.

Always remember, little things can quickly add up to huge savings. And for savings relating to home financing or refinancing, please feel free to call or email us with any questions. We’re always glad to talk…. Have a great day!
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FHA RAISES ANNUAL PREMIUM

Posted on March 27, 2011 by georgia-loan-pro

FHA Raises Annual Premiums

While the Up Front Mortgage Insurance Premiums (UFMIP) remained the same, the monthly payment on an FHA loan will rise again for all case numbers ordered on or after April 18, 2011 with the new higher annual premium.    See all the new factors below and how to calculate payments.

 

FHA Mortgage Insurance Premiums

 
Loans > 15 years
UFMIP = 1.00% Annual Premium
LTV Through 4/17/2011* On/After 4/18/2011**
≤ 95.00 % .85% 1.10%
> 95.00 % .90% 1.15%
Loans ≤ 15 years
UFMIP = 1.00% Annual Premium
LTV Through 4/17/2011* On/After 4/18/2011**
≤ 90.00 % None .25%
> 90.00 % .25% .50%
*For case numbers assigned on/before April 17, 2011
**For case numbers assigned on/after April 18, 2011

 

Example: 

$150,000 sales price @ 5% interest rate fixed for 30 yrs with a 3.5% down payment (96.5 % LTV)

$150,000 – $5,250 = $144,750 Base Loan Amount

$144,750 x 1% = $1,447 UFMIP

$144,750 + $1,447 = $146,197 Total Loan Amount

$146,197 x 1.10% ÷ 12 = $134.01 Annual Mortgage Insurance (paid monthly)

Monthly Payment Calculation on $146,197 Total Loan Amount

Principal and Interest     $  784.82

Annual Mort Ins                  134.01

Taxes (estimate)                200.00

Hazard Ins (estimate)          80.00

 

Total Monthly Payment      $ 1,198.83

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LENDING NEWS OF THE WEEK – 25April2011

Posted on March 21, 2011 by georgia-loan-pro

>> Market Update 

QUOTE OF THE WEEK…“I couldn’t wait for success, so I went ahead without it.”–Jonathan Winters

INFO THAT HITS US WHERE WE LIVE…The housing recovery isn’t yet a success, but last week gave us a few good reasons to keep plugging along. First came March Housing Starts, bursting UP 7.2% to a 549,000 unit annual rate. February starts were also revised UP 6.9%. Then we found out new Building Permits surged 11.2% in March to a 594,000 annual rate and were revised UP 3.3% for February. Starts and permits are still down over 13% from a year ago, as residential construction has dropped to only 2.3% of GDP, its lowest level on record. But economists say it won’t go much lower, and that’s what these latest numbers are signaling.

We also had Existing Home Sales UP 3.7% in March and off only 6.3% compared to a year ago. The median existing home price rose for the month and is down just over 5% for the year, while average prices are off just over 3% from 12 months ago. Looks like existing home prices are stabilizing. Finally, the supply of existing homes dropped to 8.4 months in February. Some experts see existing home sales getting back to an annual level around 5.5 million units, but caution that the recovery will be volatile.

BUSINESS TIP OF THE WEEK…The secret to success in business? Give terrific value, treat your customers well and watch your expenses. Experts say to focus on these three things and everything else will take care of itself.

>> Review of Last Week

STOCKS REVERSE RECENT SLIDE…In a four-day week of trading, investors sent stock prices back in the right direction (UP!), as all three major indexes posted gains. This happened in spite of some negative items that could have easily pulled things the opposite way. The biggest bit of bad news came Monday when Standard & Poor’s lowered its outlook to negative on the U.S. AAA credit rating. They threatened to downgrade this rating unless Washington can cut its huge federal budget deficit in the next two years. We also had the Philly Fed index showing manufacturing sentiment in that region dropping to a five-month low.

But a bunch of blow-out corporate earnings reports got everyone feeling more hopeful and started the stock market rallies. Big winners who exceeded Q1 earnings expectations included Intel, United Technologies, Yahoo! and Freeport-McMoRan. Then Capital One, Qualcomm and UnitedHealth joined the party, but the big star was Apple, with a 95% boost in earnings during its last quarter, mostly from iPhone and Mac sales, since the new iPad 2 has been slowed by a production backlog. The week ended with March Leading Economic Indicators UP better than expected.

For the week, the Dow ended UP 1.3%, at 12,506; the S&P 500 was also UP 1.3%, to 1,337; and the Nasdaq was UP 2.0%, ending at 2,820.

Bond prices drifted slightly higher for the week, as the market figured that all the federal government belt tightening would slow economic growth. This helps bonds and the price of the FNMA 4.0% bond we watch ended the week up .05, closing at $98.20. National average rates for conforming mortgages eased lower in Freddie Mac’s weekly survey, and remain at historically low levels. The Mortgage Bankers Association reported demand for purchase loans UP 10% compared to the week before.

DID YOU KNOW?…Existing home sales are now at an annual rate of 5.1 million units, 32.1% above their low of 3.86 million units. This occurred in July 2010, just eight months ago.

>> This Week’s Forecast

HOUSING, THE FED, INFLATION AND A FIRST LOOK AT Q1 GDP…This is a week full of popular topics, starting with March New Home Sales, forecast to be up a bit from February. Thursday’s Pending Home Sales for March will give us an idea of existing home closings a couple of months out, expected to be up a tad too. Wednesday, it’s the Fed’s FOMC rate decision. No one expects the rate to budge, but the policy statement will be scrutinized for signs of when that situation might change.

The inflation watch continues with Friday’s Core PCE Prices for March. It should be up slightly, but not enough to concern the Fed. This key inflation indicator excludes food and gas prices which we all know are on the rise. Finally, we’ll check into the overall state of the economy during Q1, with Advanced GDP expected to show growth, though at a slower rate.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months…Economists are sticking to their guns about no hike in the Fed Funds Rate for the near term. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on: Consensus
Apr 27 0%–0.25%
Jun 22 0%–0.25%
Aug 9 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Apr 27      <1%
Jun 22      <1%
Aug 9      <2%
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