In a bit of good news for the economy, Consumer Sentiment fell to 4-month lows in August.  The drop wasn't "good news", per se, but because it wasn't nearly as large as economists expected, Wall Street cheered it.  The index, jointly published by the University of Michigan and Reuters, measures how Americans feel about their situation today, and how they envision it six months in the future. Since bottoming 5 months ago, consumer sentiment has added more than 10 points.  Rising Consumer Sentiment figures can foreshadow economic growth because confident consumers are more apt to spend money on big-ticket items including appliances, automobiles, and, of course, new homes.   The recent run of sentiment data is one more reason to believe a full economic recovery is underway. That said, the ... 09/01/2009

As a reminder, Fannie Mae is rolling out new lending guidelines Tuesday, September 1, 2009.  Starting next week, being approved for a home loan could be much more difficult. The new rules mark the first major underwriting update since April of this year.  The changes are mostly geared at fraud prevention. Among the updates: Stock options are no longer eligible for "reserves" Relocating families can't use the "trailing" spouse's projected income "Tip" income must be documented and verified Lenders must call employers to verify employment Lenders must verify tax transcripts against IRS records But there are other changes, too.  As examples: Owners and buyers of 2-unit homes are subject to new minimum FICOs with larger downpayment and equity requirements. Only 70% of stock, bond and mutual... 08/27/2009

It's no wonder that builder confidence is soaring -- their inventory of homes for sale is depleting at a furious pace. For the 4th straight month, New Home Sales gained, posting the best numbers since last September's meltdown and handily beating economist expectations. The available supply of homes is down to 7.5 months nationwide. It's further evidence that the housing market may have bottomed at some point this past spring. To be sure, the strong housing data is, in part, a reaction to three outside factors: Low mortgage rates An expiring government tax credit Hefty builder incentives But, buyers are buyers and the clearing out of outstanding inventory provides terrific support for home prices.  It also gives them reason to rise.  Coupled with the blowout Existing Home Sales numbers ... 08/27/2009

18 of 20 markets tracked by the Case-Shiller Index showed rising home values in June.  It's the 5th consecutive month with strong numbers and the best showing for the benchmark housing index since home values began deflating in 2006.  Some would argue it's a sign that housing has finally bottomed out. Even Case-Shiller representatives acknowledge that home prices are "on an upswing". Despite the Case-Shiller Index's popularity with economists and the press, though, it's falls short of being a perfect housing indicator.  As examples: Its data is reported with a 2-month lag Its sample set includes just 20 U.S. cities Real estate isn't a "national" market -- it's local Nevertheless, flaws aside, Case-Shiller is still important.  It helps identify broader trends in housing and many people ... 08/25/2009

Filing an official Change of Address form with the United States Postal Service is one of the most important steps in the moving process. It's how bills, letters and catalogs find you after your change of residence. Strangely, though, a lot of people wait until the last-minute-before-moving before telling the post office that a Change of Address in needed.  As a result, mail gets lost-in-transit as "undeliverable". It doesn't have to be like that. In addition to the USPS' own online forms, there are third-party companies that combine secure online address changes with money-saving coupons for sure-to-be-needed utilities including cable, phone and electric. If you're moving or relocating, think about updatingyour USPS mailing address as soon as you have a move date. This will give the po... 08/25/2009

The housing market continues to surprise.  Last week, the latest good news came in the form of the monthly Existing Home Sales report. An "existing home" is a home sold by an existing owner as opposed to a developer.  It's non-new construction property. The data on Existing Home Sales was noteworthy for its trends: Sales volume rose over four straight months for the first time in 5 years Sales volume rose year-to-year for the first time in 4 years Median home prices fell for the first time since April Furthermore, first-time home buyers and buyers of "distressed" homes accounted for nearly one-third of the market activity each. But, before we declare a bottom in housing, it's important that we remember the First Rule of Real Estate -- All Real Estate Is Local. The Existing Home Sales re... 08/25/2009

If you plan to use the First-Time Home Buyer Tax Credit program, time is running out.  The program expires November 30, 2009 and closing on a home can take up to 60 days. That leaves you 6 weeks from today to find a home and go under contract. The First-Time Homebuyer Tax Credit program was passed as part of the 2009 economic stimulus plan. It credits up to $8,000 in tax payments to qualified buyers. The qualification criteria are as follows: Buyer may not have owned a "main home" in the past 36 months The home may not be purchased from a parent, spouse, or child Adjusted gross income for the household must be below $95,000 for single tax filers and $170,000 for joint tax filers Furthermore, not everyone who's qualified will get the full $8,000. The credit can't exceed 10 percent of a h... 08/20/2009

Single-family Housing Starts rose for the 4th straight month in July, another sign that the battered housing market may be making its comeback. "Housing starts" are new homes on which construction has recently started.  Not surprising, in a related story, homebuilder confidence moved to a 12-month high. Ironically, an increase in newly-built homes could actually slow a nationwide housing rebound because values are driven by supply and demand. More in-the-pipeline supply means that buyer demand has to stay strong or else prices will eventually fall. So far this year, though, demand has kept pace.  Over the past 6 months, the combination of low mortgage rates, aggressive home valuations, and federal and state tax credits has kept buyer activity up and home values on the rise. 08/19/2009

It looks like banks are less scared of mortgage loans these days. In its quarterly survey to member banks, the Federal Reserve asked senior bank loan officers whether "prime" residential mortgage guidelines had tightened in the last 3 months. Just one-fifth of banks said guidelines tightened last quarter, a dramatically lower figure versus last quarter -- a signal that mortgage underwriting may get less restrictive in the months ahead. It is worth noting, however, that not a single responding bank said its guidelines had eased.  For now, getting through underwriting is still much tougher than it was 2 years ago.  Some of the changes today's borrowers face include: Higher minimum FICOs Larger required downpayments and equity ownership Higher income levels versus monthly debts Larger rese... 08/17/2009

Foreclosure-tracker RealtyTrac reports that the number of foreclosures nationwide rose 7 percent on a month-to-month basis last month. However, 3 states dominated the foreclosure list, tallying more foreclosures between them than the rest of the country combined. California : 30.0 percent Florida : 15.7 percent Arizona : 5.4 percent On a per-household basis, the states ranked 2, 3 and 4. Only Nevada's foreclosure rate was higher. Now, we point out these statistics for two reasons.  The first is to remind you that foreclosures can be highly local.  For all of the foreclosure-related stories that run in the papers and on TV, defaults make a much larger impact on home values in some areas versus others. And, second -- foreclosures can represent a terrific buying opportunity.  Not every for... 08/13/2009

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent. It also reiterated plans to support the mortgage market to the tune of $1.5 trillion. In its press release, the FOMC noted that the U.S. economy is "leveling off" and that financial markets continue to improve. The change in verbiage is the rosiest from the Fed since the start of the recession and it may signal that the downturn's end is near. That said, the Fed highlighted lingering economic soft spots that could still impact a recovery through the end of 2009 and into 2010. Ongoing job losses Reduced "housing wealth" Tight credit conditions Furthermore, rising energy costs remain a threat to inflation. Also in its statement, the Fed confirmed its plan to hold the Fed Fun... 08/12/2009

As the unofficial end of summer, Labor Day weekend is popular vacation time for American families.  And this year, with home sales on the rise and mortgage rates relatively low, early-September figures to be a popular closing date, too. These points may appear unrelated, but there is an important connection between them.  Like workers in every other industry, employees of the mortgage, title, and real estate industries are just as likely to be taking time off on and around Labor Day.   For buyers with pending contracts, therefore, the closer that early-September closing date gets, the fewer industry folks that will be working to help close on your new house. The same goes for households in the middle of a refinance. With less than 4 weeks until Labor Day, you can take steps today to pr... 08/12/2009

The Federal Open Market Committee kicks off a two-day meeting this morning. It's one of 8 scheduled meetings the FOMC holds annually. The FOMC purpose is to discuss the nation's economic health and, as appropriate, makes new policy that either stimulates or retards economic growth. The FOMC's most well-known tool for reaching this goal is the Fed Funds Rate, currently stationed in a highly-stimulative range of 0.000 to 0.250 percent. Recent data suggests that the economy is recovering, but as of this morning, Wall Street expects the FOMC to leave the Fed Funds Rate as-is, in its current range.  However, it's not what the Fed does at its adjournment that should matter to today's rate shoppers and home buyers -- it's what the Fed says. At 2:15 PM Wednesday, the Federal Reserve will issue... 08/11/2009

At least one thing is back to normal in the mortgage markets -- it's no longer cheaper to go with a fixed rate mortgage than an ARM. As reported by Freddie Mac, a conforming 5-year ARM is priced a half-percent lower than a comparable 30-year fixed. Earlier this year, the pricing was reversed. It's uncommon for fixed rate mortgages to be cheaper than comparable ARMs because, with fixed rate mortgages, lenders commit to a particular interest rate over long period of time. There is a lot of risk that comes with doing that. By contrast, an adjustable rate mortgage is designed so that after a certain number of years, the mortgage rate changes to reflect the current market conditions.  In theory, ARMs are less risky for lenders than are fixed rate mortgages and, therefore, we would expect the... 08/10/2009

This morning's jobs report is doing a number on mortgage rates, putting another dent in home affordability nationwide. Despite the slightly flat Unemployment Rate, the government's July Non-Farm Payrolls report reinforced the notion that the recession may be ending soon, if it hasn't already. Just 247,000 jobs were lost last month -- much fewer than analysts had expected. Now, if it seems strange to be talking economic recovery while Americans are still losing jobs -- 5.7 million in the last 12 months, in fact -- remember that we have to take the data in context. Job loss doesn't lead to economic growth, per se, but analysts tend to treat employment data as a lagging indicator.  Business is often slow to hire and slow to fire, so the jobs report rarely reflects the "right now". A terrif... 08/07/2009

The number of homes under contract to sell rose in June for the fifth straight month. It's the Pending Home Sales Index's longest winning streak since 2003 and another piece of evidence that the housing market may be rebounding. The supply of new homes is falling The supply of existing homes is falling The Case-Shiller Index showed home value increases in many of its markets Separately, the data is interesting. All together, it paints the portrait of a recovery. That said, we can't forget that the Pending Home Sales Index is somewhat unique versus other real estate reports.  Whereas data on existing and new home sales measures closed transactions, the Pending Home Sales Index only measures intent to buy. Just because a home goes under contract, in other words, doesn't mean that it actua... 08/05/2009

Where does the money go? If you're like most U.S. consumers, more than half of it goes to housing and transportation costs. According to the government's most recent Consumer Expenditure Survey, spending patterns are little changed from years prior.  More money is spent on entertainment and less money is spent on dining out.  Beyond that, the figures are somewhat static. Meanwhile, using on the survey's industry-by-industry breakdown, we can see how monthly housing payments and daily commuting costs impact a household's budget. For the budget-conscious, going out less often and bargain-shopping can help pad the bottom line, but not as much as living in a less expensive home or moving closer to work. Even a refinance into lower rates can make a difference. 08/04/2009

Financial advice is rarely one-size-fits-all, but this interview with Suze Orman is worth a watch.  In 5 minutes with NBC's The Today Show, Ms. Orman covers a ton of relevant ground for homeowners and the public-at-large: Who should -- and shouldn't -- be paying down their mortgage What backlash to expect from the Dow's 40% run-up since March Why July 2009 is so different of an environment from July 2008 Then, as a bonus, Orman explains the relationship between bond prices to bond yields. It's the heart of why mortgage rates rise when inflation is present. A lot of what Orman talks about is spot-on, but that doesn't necessarily make it appropriate for your individual situation. Before acting on Orman's opinions, talk to your financial professional first. 07/30/2009

After starting the week with a run lower toward 5 percent, mortgage rates have reversed course.  It started mid-day Tuesday and the culprit is Basic Economics.  Here's why. Mortgage rates are based on the price of mortgage-backed bonds and -- like most things -- mortgage-backed bonds prices are based on Supply and Demand.  When bond supplies grow faster than the corresponding demand for them, bond prices tend to fall and when bond prices are down, bond yields are up. Meanwhile, this week, the U.S. Treasury is making its largest weekly auction in history.  $115 billion in new debt, to be exact.  This means that before the week is through, $115 billion in new bond supply will have been introduced into the market and -- so far -- demand hasn't kept pace with the new supply. Prices are plun... 07/29/2009

For May, the Case-Shiller Index showed home values up in 15 of its 20 tracked U.S. markets.  It's the first time in nearly 3 years that the index showed such strength and a signal that home prices may be turning higher for good. According to a Case-Shiller Index spokesperson, "this could be a signal that home price declines are finally stabilizing." However, just because the Case-Shiller Index indicates home values are stabilizing, doesn't necessarily make it true.  Real estate is a local phenomenon and the Case-Shiller Index tracks just 20 U.S. cities.  Residents of every other town are unaccounted for. Additionally, even within the 20 tracked cities, there are distinct neighborhoods and pockets that are under-performing the general market -- just as there are those that are over-perf... 07/28/2009