This Week’s Market Commentary

This week brings us the release of six reports that may influence mortgage rates, but only two of them are considered to be highly important. With no relevant auctions or speeches on tap, I suspect we will see much less movement in mortgage rates this week compared to the past couple of weeks.

With the wild swings in the markets last week, a calmer week won’t be too difficult to accomplish. We will still likely see more movement in the major indexes and mortgage rates, but probably to a lesser degree. There is no relevant data scheduled for release today, so look for the stock markets to drive bond trading and mortgage rates. Tuesday has two of the week’s six reports scheduled to be posted.

The first is July’s Housing Starts data. This report gives us an indication of housing sector strength and future mortgage credit demand. However, it isn’t considered to be of high importance to the bond market or mortgage pricing and usually doesn’t cause much movement in mortgage rates unless it varies greatly from forecasts.

July’s Industrial Production is Tuesday’s second report with a release time of 9:15 AM ET. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important to the markets and can influence mortgage rates slightly if it is a dead day for other news or events. Current forecasts are calling for a 0.4% increase in production, indicating some strength in the manufacturing sector. Good news for the bond market and mortgage rates would be a decline in output, signaling sector weakness.

One of the week’s key inflation indexes is July’s Producer Price Index (PPI) that will be posted early Wednesday morning. It will give us an indication of inflation at the producer level of the economy. There are two readings in the report- the overall index and the core data reading. The core data is more important because it excludes more volatile food and energy prices that can change significantly from month to month. Current forecasts call for no change in the overall reading and a 0.2% increase in the core data. A larger increase in the core data could push mortgage rates higher Wednesday morning. If it reveals weaker than expected readings, we may see mortgage rates improve as a result.

The PPI will be followed by the even more important Consumer Price Index (CPI) early Thursday morning. The Consumer Price Index is one of the most important reports we see each month as it measures inflation at the consumer level of the economy. As with the PPI, there are also two readings in the report. Current forecasts call for a 0.2% increase in the overall index and a 0.2% rise in the core data reading. Declines in the readings, especially in the core data, should lead to lower mortgage rates. However, stronger than expected readings will likely cause an increase to mortgage pricing Thursday

July’s Existing Home Sales report will be posted late Thursday morning. The National Association of Realtors will release this report, giving us a measurement of housing sector strength. It covers approximately 85% of home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts’ forecasts. It is expected to show an increase from June’s sales, meaning the housing sector strengthened last month. This would generally be bad news for the bond market and mortgage rates because a strengthening housing sector makes a broader economic recovery a little easier.

The third report of the day Thursday will come from the Conference Board, who will give us its Leading Economic Indicators (LEI) for July. This index attempts to measure economic activity over the next three to six months and is considered to be moderately important. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening more than thought. However, a weaker than expected reading means that the economy may not grow as much as predicted, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage rates Thursday if the stock markets remain calm and the day’s other data does not show any surprises. It is expected to show an increase of 0.2 % in the index, indicating minor economic growth over the next couple of months. The CPI will be the focus of the morning, so it will take a sizable difference between forecasts and its actual reading for this report to influence mortgage rates.

Overall, look for Thursday to be the busiest day of the week with the CPI being released, but Wednesday’s PPI can also cause plenty of movement in the markets and mortgage rates. Friday looks to be the lightest day. The rest of the week will likely be influenced by stock prices in addition to the moderately important economic data, which can be quite volatile as we have seen over the past couple weeks. Therefore, keep an eye on the markets and maintain contact with your mortgage professional if you have not locked an interest rate yet.

Low Mortgage Rates Make it a Good Time to Buy

With mortgage rates at a 30 year historic low, the Wall Street Journal is suggesting now is the best time to buy. Ken Rosen of the U.C. Berkeley Fischer Center for Real Estate said that mortgage rates will be much higher five years from now, and to take advantage of the current low rates.

The Wall Street Journal video below elaborates:

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How would a government shutdown affect the mortgage business?

The last time we went through a government shutdown in 1995, it was a pain, but not a panic. I can assure you my company has prepared all loans in our pipeline and are looking at new contracts not yet acquired for a worst case scenario, so the disruption will be minimal. If a shutdown would occur, these would be the top six areas that can affect us during a government shutdown:

FHA Case Numbers: For each FHA loan, we are required to order a FHA case number. This number is generated before an appraisal can even be ordered. With a shutdown, we may not be able to order case numbers. Because of this, it is critical to let us know if there is a contract executed on any loan, so that our office can go ahead and order a case number without risking the loan being on hold during a shutdown. Note: with the new FHA guidelines, a contract must be executed before a case number can be ordered.

The ability to close FHA loans is questionable, depending if HUD keeps its website running to obtain FHA case numbers and CAIVRS (During the November 1995 shutdown, case numbers could not be obtained, but this was prior to the internet and was a manual process). The shutdown in 1995 mainly caused a delay rather than a drop in FHA loan origination, but if lenders decide to stop accepting FHA applications, it could be a problem. I think we will see delays but not a complete shutdown of the FHA.

4506 IRS Transcripts: Each loan requires the verification of at least one tax return by the IRS to verify the numbers that each customer presents us on their tax returns. During a shutdown, this process would be delayed as the IRS wouldn’t be at work to verify the transcripts.

Verifying Employment of a Government Employee: We are required to verify the employment of each customer. If the customer is a federal government employee, we would be unable to verify his or her employment during a shutdown.

FEMA: Homes in a Flood Zone: Homes that are determined to be in a flood zone would not be able to close as flood insurance could not be obtained.

USDA: During a shutdown, the USDA office would be closed because they have government underwriters that insure behind the lender. With a shutdown, we would see delays with all USDA loans.

VA: Like the FHA, the disruption is possible -- but not absolute -- during a shutdown. This would all depend on if they continued to allow their website to function. A disruption would cause delays in VA appraisals and the issuing of certificates of eligibility. If the website was closed during a shutdown, we would see delays in all VA loans.

We are committed to you and all of our homebuyers. Stay tuned for updates in this very important time period.

Creative Ways to Retire Without Savings

Like many baby-boomers today, you may be faced with an upcoming retirement and a lack of a retirement savings account due to the rough economic times of the past few years.

A recent CBS MoneyWatch article tackles this problem by suggesting resourceful ways to make retirement work for you.

One bold idea is to pair up with another married, retiring couple, pooling together Social Security income for a manageable budget. Social Security income at age 66 will be $2,000 per month, with an additional $1,000 per month for the spouse, resulting in a $36,000 per year income.

If you find a like minded couple, consider moving into a three bedroom house together, making the combined household income $72,000. This is higher than the 2009 national average income.

Another tactic is to delay retirement until age 70, in which case your monthly Social Security income will increase to $2,640 per month. In this situation, your spouse would not need to delay past age 66 to receive the $1,000 per month. “You’d want to file and suspend your Social Security income at age 66, so your spouse can start the $1,000 monthly spousal benefit income at age 66,” advised the article.

At age 70, your combined income would be $43,680 per year following this plan. If you were to pair up with another married couple, that Social Security income would increase to $87,360 per year.

Your circumstances may not be right for such an arrangement, but this is just one example of creative and resourceful ways to head into retirement in this economic climate.

Staging Your Home For Sale

Home staging is important factor in selling your home, especially in a competitive market. A well-staged home can make the difference between a quick sale and a long, arduous process.

While you can hire professionals to stage your home, you can save money by doing it yourself. In the video below, an award-winning home staging professional gives tips and advice.

Princeton Capital Ranked #3 Company to Work For In Bay Area

In the Sunday edition of the Mercury News, the Bay Area News Group published their February survey results of the Top Work Places. We were ranked #3 for mid-sized companies (150 to 500 employees). The rankings were based upon surveys completed by employees which makes this honor even more special.

We also received a special award in the area of Ethics for the way we conduct business. Below are links to the rankings, our profile, the special awards listing, and information about how the rankings were compiled.

Don’t miss the picture of the “worker bees” which was printed on the front page of the special section in the newspaper.

Mercury News Top Workplaces List

Princeton Capital Profile

Ethics Award

Princeton Capital mentioned in Open Communication article in SJ Mercury

Congratulations, and especially thank you, to all employees and clients for making this one of the best places in the Bay Area to work! Princeton Capital is currently hiring loan officers; take a look at our website to get in contact and learn more.

“This is a huge honor, and purely reflective of all of [the employees'] individual efforts and dedication to each other,” said Rob Reid, CEO. “I am very honored to be part of this great team.”

How to avoid big problems with your do-it-yourself project

If you have a few construction skills, you might be eager to tackle a home modification project. Before getting started, here are several steps and cautions that should be considered.

* Make a written plan. Prepare a day-by-day calendar outlining each portion of the project and how many hours it will take to compete.

* Get a city permit. If you are adding a room, putting up a storage building or changing your patio into a room, you need a permit. Some plumbing and electrical jobs require permits, as do changing gas or sewer lines.

* Buy the correct materials. Skimping with inexpensive products can compromise the quality of the job.

* Invest in a set of tools specifically designed for the repair or the construction job.

* Use safety gear. Wear safety goggles when using a power saw. Buy the best gloves for the job. Wear a hard hat if others will be working above you.

* Before you pick up a power tool, climb a ladder or raise a hammer, consider whether you can do the job safely. If you aren’t sure, hire a professional for that part of the project, especially when it includes electricity or moving heat ducts or plumbing lines.

* Be very cautious with chain saws. They send many a do-it-yourselfer to the emergency room.

* Emphasize accuracy. Remember the principle, “Measure twice, cut once,” when working with drywall, baseboards or pipes.

* Expect the unexpected. If you are moving a wall, don’t be surprised to find problems such as termites, mold inside the wall, or electrical wiring that has to be moved.

It’s exciting to plan and to get started on a DIY project, but always remember: Safety first!

How to avoid big problems with your

do-it-yourself project

This Week’s Market Commentary - May 30, 2011

This holiday-shortened week brings us the release of five important economic reports for the markets to digest. Two of the five are considered to be of very high importance to the bond market and mortgage rates. The remaining reports are considered to be of moderate importance to the markets.

The financial and mortgage markets will be closed today in observance of the Memorial Day holiday and will reopen Tuesday morning.

The Conference Board will start the week’s more important releases by posting their Consumer Confidence Index (CCI) at 10:00 AM Tuesday. This is data measures consumer willingness to spend. If the index rises, it indicates that consumers feel better about their personal financial situations and are more apt to make large purchases. If confidence is sliding, analysts think consumer spending may slow in the near future. The latter is good news for the bond market because consumer spending makes up two-thirds of the U.S. economy. A decline in the index should boost bond prices and push mortgage rates lower Tuesday morning. It is expected to show a reading of 66.3, up from April’s 65.4 reading.

The Institute for Supply Management’s (ISM) manufacturing index will be posted late Wednesday morning. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. Analysts are expecting to see a 57.6 reading in this month’s release, meaning that sentiment fell during May. A smaller reading will be good news for the bond market and mortgage shoppers while an unexpected increase could contribute to higher mortgage rates Wednesday.

The revised 1st Quarter Productivity and Costs data is the first of two reports that will be released Thursday morning. This data measures employee output and employer costs for wages and benefits. It is considered to be a measurement of wage inflation. It is believed that the economy can grow with low inflationary pressures when productivity is high. Last month’s preliminary reading revealed a 1.6% increase, but I don’t think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from that reading.

The second release of the day will come from the Commerce Department, who will post April’s Factory Orders data during late morning trading. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn’t expected to cause much change in rates this month. Current forecasts are calling for a decline in new orders of 1.0%.

Friday’s sole report is arguably the single most important report that we see each month. The Labor Department will post May’s Employment data early Friday morning. This report gives us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate remain at 9.0% this month with approximately 185,000 jobs added to the economy during the month. A higher than expected unemployment rate and a smaller number than 185,000 in new payrolls would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates Friday. However, stronger than expected numbers may lead to a spike in rates Friday morning.

Overall, Wednesday or Friday is likely to be the most important day of the week as they bring us the two most important reports on the agenda. If they give us weaker than expected results, we could close the week with lower mortgage rates than Tuesday’s opening levels. However, if we see stronger than expected readings in those two releases, I expect mortgage rates to move higher on the week.

But that is very much dependent on seeing a relatively calm week in stocks. As we have seen the past two weeks, stock market volatility can heavily influence bond trading and mortgage rates and significantly minimize the impact that these economic reports normally have on rates. Accordingly, it would be wise to maintain contact with your mortgage professional if still floating an interest rate.

5 Things to Think About When Looking for Your Dream Home

While on the hunt for a perfect home, it can be immensely helpful to create a wish list of sorts. This can help you and your real estate agent obtain a clear picture of what type of home would best suit you.

Some things to consider:

1. Move-in ready or fixer-upper?
Making a home “your own” can make fixer-uppers an attractive option, along with the lower cost. Making a mark on your new home via renovations. Take some time to think about what homeownership means to you, and whether you are interested in renovation.

2. Upgrades
Certain upgrades in a home, such as marble or granite counters, are often coveted by buyers. Consider what type of upgrades are important to you – energy-efficiency, professional grade appliances, luxury tiling? Make a list and show your Realtor.

3. The Yard
What type of backyard are you looking for, and how important is it to you? Think about low versus high maintenance yards, the amount of space you’d like, and what kind of yard would best suit your lifestyle.

4. Swimming Pools
For some homebuyers, having a swimming pool can be a dealbreaker. If this is something that you really desire in your dream home, make that clear to your real estate agent so that they can narrow the search for you.

5. Schools in the Area
Last but certainly not least, the quality of the schools in the area of a dream home should be an important thing to research. Ask your Realtor for information about schools in the area of your search, and comparisons between them. This information is easily obtained, and real estate agents will be more than happy to show you school scores and more. Also consider private schools, if that is an option for your family.

The Power of Bona Fide Pre-Approval

While most mortgage lenders offer a form of “pre-approval” for a loan, Princeton Capital is one of the few lenders anywhere that can do an actual fully underwritten loan pre-approval. With our banker and broker business model, pre-approvals for loans are not conditional on multiple minutiae of a transaction.

It is difficult to overestimate the power of a real loan pre-approval and its role in a successful real estate transaction. Pre-approvals make the seller of a house more comfortable about the offer, and in a competitive market, this can make all the difference.

According to Bay Area Realtor Larry Miller of Coldwell Banker, standard practice in the area is that a loan pre-approval accompanies any offer on a home. When the pre-approval comes from Princeton Capital, he is able to give the seller complete confidence that buyer is, in fact, qualified and the transaction will be able to close.  Not so with many other pre-approvals, which are not fully underwritten and thus are only worth the paper they’re printed on.

“If a seller is looking at two different offers, they can feel much more confident with the Princeton Capital one,” said Miller.

The difference between the loan pre-approvals the real estate agent sees from other loan companies and from Princeton Capital is the reliable commitment of the latter that the buyer does indeed qualify.

Looking over pre-approval letters from three diffferent companies, one of which being Princeton Capital, Miller pointed out the extensive conditions on the other letters – one of which included more than eight conditions under which the”pre-approval” was not guaranteed.

“How much confidence can this give you?” asked Miller, in reference to the extensive conditions and lack of guarantees on one pre-approval letter.

A true pre-approval from Princeton Capital gives homebuyers a huge competitive advantage when making an offer on a home, because sellers can be completely confident that the buyer is indeed able to purchase the home, speeding up the transaction and ensuring its success.

Time for a Home of Your Own?

Today, you can get all of what you need and most of what you want.
When it comes to fine kitchens, more bedrooms, storage space, and great features, your chance of getting them all is better than in many previous years. How about a deck and a sunroom?

The recent Housing Affordability Index by the National Association of Realtors is 173.8, or about 40 points lower than in 2008.

How to Qualify
The average price for a single-family home in the index is $170,300. To qualify for that purchase at an interest rate of 5.09 percent, buyers would only need a family income of $34,512.

Another interesting way to look at affordability was shown recently in The Wall Street Journal. The Journal reported that the cost of a home now is equivalent to about 19 months of total income for an average family.

Previously, home prices averaged about 24 months of an individual or family income. That means more buyers can afford a home right now.

While the affordability numbers are a good indication, the number of available homes is also a plus. Home buyers can find many in their price range to choose from. Why should they pay  high rents when they could be accumulating equity?

What Mortgage Brokers Say
Home ownership is a smart choice when you have reached a stable situation in your life. According to mortgage brokers, that means you have decided on a life path and are taking steps to achieve it, and your income is secure.

When you aren’t moving to another city in the next several years, and you have savings for a down payment, you are ready to move forward with your housing plans.

An idealized vision of how life should be will help you choose a home, but the mortgage brokers say the basic facts to justify The American Dream should be in place.

Lower Loan Limits Coming October 2011!

At the beginning of the mortgage meltdown a couple of years ago, Congress enacted emergency legislation raising the limits on High Balance Conforming Loans.

These loans are designated “conforming,” meaning lower interest rates and typically a slightly easier transaction to get approved and closed when compared to Jumbo (or non-conforming) financing.  The High Balance variety is only available in designated high cost areas, like the San Francisco Bay Area.

Currently the “temporary” limit on these loans is $729,750.  This means that if you put 20% down on a $900,000 home, you can get a conforming loan in the amount of $720,000.  Effective October 1, 2011 the emergency legislation expires and is not expected to be extended.  This lowers this High Balance Conforming Loan to $625,500.

So, what does that mean to you?  If you buy the same $900,000 home and put 20% down, your loan will now be considered a Jumbo loan.  Rates on Jumbo loans are typically 1-1.5% higher, so if today you could get that loan for, say, 5% your payment would be $3865.12.  The same loan amount using the Jumbo rates would be 6-6.5%, bringing your payment to $4550.89.  Over 30 years, that totals over $246,000!  The other option would be to put a larger down payment on the property, to the tune of nearly $100,000.

The important thing to note is that if you are looking for a loan to purchase a home, or refinance the one you already have, now is the time to move forward. The limit will remain at the higher point until the first of October, giving home buyers the spring and summer seasons to purchase a property before the high limits are gone.

To find out what the current loan limit is in your area, you can access the Fannie Mae website to see a county-by-county spreadsheet.

According to Alan Russell, a local mortgage professional, “The higher limits have really helped people get into homes here in the Bay Area.  Once those limits reduce, there will be fewer options for those trying to get into the real estate market.  I’ve been talking to all my buyers and giving them fair warning that the time to move is definitely now.”

5 Rules for Mortgage Insurance Tax Deductions

President Obama has signed a bill that has extended the tax deduction of mortgage insurance through 2011.

Here are the rules to remember in regards to this tax deduction:

1. Your purchase or refinance loan must close before Dec 31st, 2011.

2. Household income must be $100,000 or less to get the full write off of the insurance premium.

3. The amount of the write off is reduced by 10% for every $1000 over $100k, with it phasing out at $109,000. This means if you make over $109k as a household you can not write off mortgage insurance.

4. It applies to your primary home and one other residence that the tax payer uses.

5. All forms of mortgage insurance qualify for this. So if you have a FHA or conventional loan, they qualify. If you have paid upfront mortgage insurance with a VA, FHA or USDA loan you can also use this as a tax deduction. The amount is just divided over a 7 year period.

The above is not intended as tax advice. Seek out a tax professional for advice about mortgage insurance deductions.

Life Without Freddie and Fannie?

What would happen if loan giants Freddie Mac and Fannie Mae were shut down? A recent New York Times article explains that if the government eventually shuts down these companies, the 30-year fixed-rate mortgage loan could be a thing of the past.

Homeownership as we know it could change drastically, with the fixed-rate loans at risk for extra fees and high rate increases for those in urban and rural areas.

“Lenders could charge fees for popular features now taken for granted, like the ability to “lock in” an interest rate weeks or months before taking out a loan,” according to the article.

Fannie Mae and Freddie Mac carry 90% of new mortgage loans post-recession as many lenders can’t afford to make loans that aren’t government insured.  The 30-year loan has been the popular option since it was introduced in 1954 by an act of Congress, and most have been issued only with government support.
Read more about the possible outcome of Fannie Mae and Freddie Mac being shut down and what would mean for mortgage rates here.

Avoiding Foreclosure

When the stress of a possible foreclosure rises, it is important to remember that there are many resources out there to help avoid it. The programs and agencies below all specialize in helping people avoid foreclosure on their homes:

U.S. Department of Housing and Urban Development (HUD)
800-569-4287
http://www.hud.gov/local/ca/homeownership/foreclosure.cfm

HUD Avoidance Counseling
http://www.hud.gov/offices/hsg/sfh/hcc/fc/

Making Home Affordable Program
888-995-HOPE
http://www.makinghomeaffordable.org/

Housing California
916-447-0503
http://www.housingca.org/nr/resource/foreclosure_resources/

State of California – Consumer Home Mortgage Information
http://yourhome.ca.gov/

Fannie Mae Resource Center
800-732-6643
http://www.fanniemae.com/homeowners/index.html

Project Sentinel – Redwood City counseling agency
(HUD Approved Agency)
888.331.3332
http://www.housing.org/

Neighborhood Counseling Services – Silicon Valley
(HUD Approved Agency)
408-279-2600
http://www.nhssv.org/foreclosure-counseling.htm

Neighbor Works America
202-220-2300
http://www.nw.org/network/foreclosure/default.asp

National Foreclosure Mitigation Counseling
202-220-6314
nfmc@nw.org

The important thing to remember is that foreclosure isn’t always inevitable, and there are many programs and agencies ready to help. Share these resources if someone you know is going through a possible foreclosure on their home.

Tips for buying a new home

There are many pitfalls you can avoid when you are in the market to buy a new home. Here are just a few tips and strategies to help you prepare for success:

Know your credit score.
You may be able to get a better mortgage rate and more favorable loan terms by restructuring some of your balances on credit cards, car loans, etc. Mortgage professionals help you correct errors on your credit report and determine which balances to restructure or pay off in order to improve your credit score.

Know how much you can spend and determine how much you can afford. Mortgage professionals can help you:

• Finance your home based on your monthly payment comfort level
• Determine how much cash to use as your down payment and where to get these funds
• Understand your before and after-tax monthly payments
• Restructure some other debt you may have to free up more monthly cash flow that enables you to improve your home buying budget

Don’t get caught in the “pre-approval” / “pre-qualification” trap.
It is always better to get a full approval / loan commitment from a mortgage professional before you even start looking for a home. Many mortgage brokers and lenders will give you a “pre-approval” or “pre-qualification”, but these are often meaningless. What you really need is a bona fide commitment from a mortgage lender that you are in fact approved for financing. Many real estate transactions have been ruined because buyers, sellers and Realtors have counted on “pre-approval” letters that proved meaningless.

Determine whether to rent or buy a home based on timeframe, budget and local market conditions.
Mortgage professionals help you run the numbers to determine if it is better for you to rent or buy a home based on your individual circumstances.

Develop a strategy for financing your closing costs, home improvements and furniture expenses.
A home purchase is a significant financial commitment. Mortgage professionals help you understand the costs involved in home ownership and help you develop a financial strategy for dealing with these costs ahead of time.

Evaluate the mortgage products that will work best in your situation.
Remember, it is far better to find a mortgage professional who can help you implement the best strategy with competitive interest rates than for you to shop for the lowest rate with the wrong strategy.

Credit Score Resources

Do you know your FICO credit score?  If you are looking to purchase a home, be sure to look into your credit score well in advance.

Today’s market is competitive, with more cash buyers investing in property and multiple-offer transactions.

Are you in the 700 range? 600 range?  You will need some time to find out your score and work on improving it if need be. Check out the below sources to help you assess your credit situation.

Four Good Sources of Credit Information
Here are four websites worth visiting, if you want to learn more about your credit reports and scores:

1. http://www.myfico.com/ — This site is owned by the company that created the credit-scoring model used by most lenders. The education tab is especially useful.  Take a look at the forum where you can post questions.
2. http://www.annualcreditreport.com/ — This website is jointly owned by the three credit-reporting companies (TransUnion, Equifax and Experian). This is where you should go to request your free reports. This is the only site that is regulated by the Federal Trade Commission.
3. www.ftc.gov/freereports — This website is useful to find out why a “free” credit report is offered, but then they try to “charge” you for additional things.  This is a marketing practice in wide use and this website can tell you more about it.
4. http://www.bankrate.com/ — This site offers credit tips and it explains the mortgage process. You can compare rates, use a myriad of calculators and check out their “news and advise” tab for pertinent news information each week.

The four sites listed above will help you get started on your home buying adventure.

Market Commentary for week of March 7

This week brings us the release of three economic releases for the bond and mortgage markets to digest along with 10-year Treasury Note and 30-year Bond auctions.

All of the data will be posted the latter part of the week. Only one of the three reports is considered to be of high importance to the markets, so several days will likely be influenced more by stock trading and other factors than the economic news of the day.

January’s Goods and Services Trade Balance is the week’s first economic data. It comes early Thursday morning and gives us the size of the U.S. trade deficit. It is the week’s least important piece of news and likely will not influence mortgage rates much. Current forecasts are calling for a $41.5 billion trade deficit during January, but we will need to see a large variance from this estimate for the news to influence bond trading enough to affect mortgage pricing.

There will be two reports posted Friday morning. The first is at 8:30 AM and is the most important of the week. This is when the Commerce Department will post February’s Retail Sales data. It is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the markets. This month’s report is expected to show an increase in sales of approximately 1.0%. If Friday’s release reveals a larger than expected increase, the bond market will likely fall and mortgage rates will move higher as it would indicate economic growth. If it reveals a much smaller than expected increase, I expect to see bond prices rise and mortgage rates improve Friday morning.

Also on tap Friday is the University of Michigan’s Index of Consumer Sentiment for March at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates.

If the index rises, indicating that confidence is rising and spending will likely follow, we may see mortgage rates move higher late Friday morning. It is expected to show a reading of 76.5, which is would be a noticeable decline from February’s final reading 77.5.

Overall, it will likely be another active week in the mortgage market. Friday will probably be the most important day of the week with the Retail Sales report due, while the calmest day could be tomorrow or
Tuesday, depending on the stock markets.

Cash Buyers Dominate San Mateo, Santa Clara County Home Sales

Over the past several months, cash buyers – often investors – looking for bargains have been purchasing homes in San Mateo and Santa Clara counties at a high rate, according to a San Jose Mercury article. This activity lowered the average sale price in San Mateo County, and kept it level with last year’s average in Santa Clara County.

The real estate information service DataQuick stated that the area home sales are dominated by distressed homes and these cash buyers, who made up about a quarter of home buyers in January in both counties.

“What’s most interesting is how active the investors were through the holidays and into early January,” said Andrew LePage of DataQuick in the Mercury story.

Buyers in the area are on the bargain hunt as well, with multiple-offer real estate transactions being common of late. Foreclosures have allowed some buyers to get in to the market, and the low prices fuel the competition fire.

It is hard to compete against a true cash buyer when bidding on a property. To stand out when making an offer, make sure you get your loan pre-approved properly, essentially turning yourself into a “cash buyer.”

Mortgage Rates Ease

This past week, mortgage rates have declined “as fears about the economic

Graph via the Wall Street Journal
This past week, mortgage rates have declined “as fears about the economic impacts of turmoil in the Middle East helped depress yields on long-term bonds, including those that fund most home loans,” according to Inman News and a survey by Freddie Mac.

The Wall Street Journal reported that the 30-year fixed-rate mortgage averaged 4.95%, down from last week’s 5% and 5.05% a year before.

Rates on 15-year fixed-rate mortgages were 4.22%, below last week’s 4.27% and the year-earlier average of 4.4%, as well.

After a spike in rates that hadn’t been so high since last April, this is promising for a downward trend in mortgage rates despite mixed overall economic reports.

Financial Fitness

This article about being financially fit has great advice for small, inexpensive ways to save more money over time with your home.

Several tips that stand out are:

1. Be fire ready – Check that your fire extinguishers are functioning and easily available, and check your smoke detectors as well.

2. Prevent shocks – Outlets near water, such as in the bathroom or kitchen, should have a ground fault circuit to prevent shocks and electrocution. An inexpensive tool can alleviate this worry.

The major takeaway from this is that by making small investments in your home, you save yourself more in the long-run and protect the value of your property.

Full article here.