The Mortgage Man

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Archive for May, 2008

Mortgage Bonds Have A Rough Week

Mortgage rates have have a rough week, here is a wrap up of the weeks financial news.

The Financial Markets Weekly Wrap Up

Yet another exciting week in the bond market, and many are left scratching their heads as to where we go next.  This was a busy week for financial news, and when there are reports coming out, the markets lie with baited breath for guidance on how to react.  This week that reaction was “Run for the hills!”.

Tuesday May 27th

The Consumer Confidence report came out lower than expected, and the New Home Sales report came back higher than expected.  Overall it was a good news bad news day, and there was not much movement in the markets.  Although they did head south overall for the week.

Wednesday May 28th

The Durable Good report came out slightly better than expectations, but fears of inflation from comments made by the federal reserve led bonds to drop below the 25day, 50 day and 100 day moving averages.

Thursday May 29th

Yesterday, the markets reacted negatively to the Gross Domestic Product report and the Jobless claims report and drove mortgage bonds below the 200 day moving average.  This was significant because only 3 times in the last 3 years have bonds made such a decisive move across the 200 day moving average.

Friday May 30th

Today, bonds traded up slightly from yesterday, but still have not come up above the 200 day moving average.  This is particularly concerning because a quick rebound would have been less damaging to the market as a whole.  The longer they stay below the 200 day moving average, the more likely that rates are not just up on a short term basis, but rather, they may be trending that way long term.

Overall, it has been a bad week for those in the mortgage industry, and those who are shopping for a mortgage loan right now.  Based on the shear uncertainty in the market, I would recommend locking your rate to save from potential losses on your purchase loan.  If you are refinancing, make sure that you have locked to maintain the benefit of the refinance to begin with.

Thursday May 29, 2008

Mortgage Bonds Continue To Fall On Shaky Economic Uncertainty

Mortgage Rates Increase

Well, there is not much good news today, so let’s get right to it.  Mortgage bonds moved below the 25 day, 50 day, and 100 day moving averages earlier this week, and after flirting with the 200 day moving average yesterday, it has moved decisively below it today.

So what does this mean for you as a consumer and potential home owner?  Since the 200 day moving average has only been crossed with such vigor 3 times in the last 3 years, this is a very clear indicator that the overall trend on mortgage rates is that they are moving up.  If you have a loan in process and have not locked it, you better do it TODAY.

In other economic news, the Gross Domestic Product (GDP) report came out today showing first quarter growth of 0.9% which is higher than the estimated 0.6% that the markets were expecting.  At the time of this article, the markets are up slightly, but nothing to get excited about.

Also, the Treasury will be auctioning off $19 Billion in 5 year notes today.  Since the auction of 2 year notes yesterday did not go as well as planned, today’s auction is not expected to be any better.

Overall, today’s recommendation for mortgages would be to lock in your rate while you still can, it may get ugly in the coming days.

New Senate Bill Imposes Fingerprinting For All Mortgage Loan Officers.

I read this article posted on C-net.com about the new bill approved by the Senate Banking Committee this week by a margin of 19-2.

National fingerprint registry

I don’t have a problem with the bill since in Florida (where I have been a licensed Mortgage Broker for 11 years) all Mortgage Brokers are required to submit fingerprints for a background check. This has been in place for years, and after hearing that states like Minnesota don’t even require a test, there needs to be some sort of intervention.

What I do have a problem with is the level of secrecy surrounding the bill, and the refusal of drafters Sen. Dianne Feinstein (D-Calif.) and Mel Martinez (R-Florida) to answer questions about how it will work or to return phone calls to reporters about the bill. As I get older (and increasingly cynical about the government in general), I find my self becoming more irritated that many elected officials seem to forget that they work for us.

If this proposed legislation is such a great solution (and not just an opportunity for 2 Senators to get their names in the paper), then what is the problem with talking about it?

Selling Your Home In A Difficult Market – 1

How do you sell when competition is high and equity is low?

If you are a home owner and you need to sell, you are no doubt aware that the competition is fierce. Your reasons for selling will likely dictate the level of aggression that you put into marketing it, but here are some things you need to know to separate yourself from the pack.

Get ready to sell

Getting ready to sell your home can come in many forms. You need to have your home clean and tidy for buyers to view it. You need to make sure that the front yard is presentable and inviting. This is called curb appeal, and if buyers don’t even want to get out of the car, it will be hard to sell them your home.

Getting ready to sell is also a state of mind. You have to think like a seller, and picture your home the way that a buyer would. This can mean several things but here are the most important ones:

De-personalize your home

De-personalizing means to make your home look more like a model home and less like someone is currently living there. If you have lots of pictures on the mantle and knickknacks everywhere, go ahead and box them up (consider this as part of preparing to move since you will have to box it up anyway). The more clutter you have, the smaller the house will feel, and buyers are looking for space.

The cheer leading trophies and spelling bee awards are a tremendous source of pride to you and your family, but buyers don’t care. As a matter of fact, it may be a turn off.

Make Minor Fixes

If you have a hole in the drywall where the door knob hits it, take a little time to get some drywall patch at Lowes or Home Depot. It is not a big job, and depending on the size of the hole, it is a relatively easy fix.

Make sure all light bulbs work, and fix the ones that don’t. Make sure that there are no leaky faucets, and fix them if there are.

Check back on the next post for additional tips, and how to choose the right Realtor.

Thursday May 22, 2008

Today’s Mortgage Market Is Battered Again By Oil Prices And Threats Of Inflation!

With oil prices hitting another record high at over $135 per barrel, inflation fears are stirring the mortgage bond market to run for the hills.  Mortgage bonds have fallen through 3 major levels of support at the 25 day, 50 day and 100 day moving averages.  For the market to bust through 3 different levels of support is significant, and if you have a mortgage loan working that is not locked…I highly recommend locking today to protect from continued losses.

The jobless claims report came out a little better than expected at 365,000 vs. the projection of 372,000.  Even though this report was better than expected, it still shows significant weakness in the jobs sector, and therefore did not pose any immediate help to the financial markets.

In other financial news, UBS AG reported an additional write off of $19 Billion in subprime mortgage losses.  This is not good news for the sector in general as it indicates that we are not out of the water yet with the credit crisis.

Tuesday May 20, 2008

Producer Price Index (PPI) Puts Pressure On Mortgage Bonds

Mortgage bonds are feeling pressure today from the Core Producer Price Index, a leading inflationary indicator, which came in at twice what was forecast.  The PPI for April came in at 0.2% which is half of the 0.4% projected, and significantly less than the 1.1% reported in March.  This is putting pressure on mortgage bonds in spite of the stock market remaining sluggish today.

Crude Oil prices set another all time high, AGAIN, last night at $127 per barrel.  This increase was likely “fueled” by OPEC’s refusal to increase oil production to meet increasing demands.  No more significant economic news is expected out today, so if the stock market continues to be sluggish, bonds will likely reap the benefits later in the trading day.

How Do You Choose The Right Realtor?

How Do I choose the right realtor?

Choosing the right realtor

I am not the first person to write about this, and will most certainly not be the last. Here are some simple things to look for.

We are in historic and interesting times in the real estate business. There are more choices, and at better prices for buyers than have existed for decades. This creates a problem whether you are a buyer or a seller as to who you choose to help you in the process. For buyers, the first thing you should know is that you need your own “Buyer’s Agent”. This is important for 2 reasons: 1) the agent that has the home listed represents the seller, and the seller is their primary responsibility, and 2) the seller pays the fee for both Realtors whether you get one yourself, or use theirs.

For sellers, the chore is more daunting. Finding a real estate professional is the most important part of selling your home. If you get the right one, they could potentially have it sold for you in weeks. And, if you get the wrong one, you might go into foreclosure without ever even getting an offer. As a seller, the relationship between you and your agent is complex, but it must be open minded to work. If you are unrealistic about the price or willingness to negotiate, you will not sell your home. If your agent is so hungry that they will tell you whatever you want to hear, rather than stick to hard market data, you also will not sell your home. Take a look at a few simple suggestions for choosing the right agent for your situation.

  • First, steer clear of the inexperienced agent. You may have a brother-in-law that is an auto mechanic, but just got his real estate license, and you feel more comfortable dealing with family. As you prepare to sell the largest asset that you and your family own, you need a professional in the same way that you would not go to a family practitioner to get open heart surgery.
  • Find someone who knows your neighborhood better than anyone. There’s an old saying in real estate that is “Live where you sell, and sell where you live”. If you find the “super agent” in the Sunday paper, but he lives 40 minutes away from your home, you will be dissatisfied with his service regardless how many awards he has.
  • Be open minded about the price, and decide if you want to “list” the property, or if you want to “sell” the property. The typical home owner may ask “what’s the difference?”, and someone in the business knows exactly what I am talking about. If you look at the comparable sales that have taken place for similar homes in your immediate area, and you are priced 20% above them because you refuse to accept less than “X” for your home, then you are wasting everyone’s time, including your own. You don’t dictate the price, the market does, and if the market is not in the right place for you right now, you need to either change your mind about selling, or change your mind about needs and wants on the price.

There is a lot more to selling your home than these simple pointers. But, the most important thing you need to take away from this article is to trust your Realtor and his(her) judgment. If you don’t….you have the wrong Realtor.