You Ask, We Answer: Should I Consider a Warranty when Buying a New Home?

You Ask, We Answer: Should I Consider a Warranty when Buying a New Home?Are you buying a new home? If so, you've likely pondered whether or not you should invest in a warranty to protect your investment. In today's blog post we'll briefly explore home warranties including some of the pros and cons of buying one and how they differ from homeowner's insurance.

The Benefits of Buying a Home Warranty

Home warranties are an excellent solution if you're buying a brand new home which has a lot of new appliances and fixtures inside of it, or if you're not really the "do it yourself" type and would prefer to make a service call if something inside of your home breaks down.

For example, imagine that you have a home warranty that covers your central air conditioning system and one day it stops working. You simply call the warranty provider to book a service call and as long as the problem falls within the scope of your warranty the repairs are completed without any additional cost to you.

How a Home Warranty Differs from Homeowner's Insurance

Home warranties and homeowner's insurance are vastly different but work together to protect your investment. Insurance policies cover your home against unexpected damage – fires, crime, wind storms, water damage and more, depending on your policy. A home warranty tends to cover items inside of the home – the furnace, the plumbing, electrical wiring and appliances – and will provide you with discounts on repairs or replacement should the covered items break down or otherwise stop working.

Cost and Other Home Warranty Downsides

Of course, there are a few downsides to buying a home warranty. You'll need to pay the up-front purchase cost of the warranty unless you're buying a brand new home in which the warranty is included. You'll also find that warranties generally won't cover a lack of maintenance due to the previous homeowner, which can be a bit of an issue if something breaks down and you find out it's not going to be covered. Finally you may find that any necessary repairs are actually less costly than the warranty itself.

Case-Shiller Home Prices: Price Growth Slows in September

CaseShiller Home Prices Price Growth Slows in SeptemberAccording to the Case-Shiller National Home Price Index, annual home price growth slipped to a seasonally-adjusted rate of 4.80 percent in September. This was 0.30 percent lower than August's year-over-year reading of 5.10 percent.

Cities posting the highest year-over-year gains in home prices were Miami, Florida 10.30 percent, Las Vegas, NV with a gain of 9.10 percent, San Francisco, California posted a gain of 7.90 percent, Dallas home prices gained 7.40 percent and home prices increased by 6.70 percent in Portland, Oregon.

David M. Blitzer, chairman of the S&P Dow Jones Index Committee, said that Florida and the Southeastern region showed sustained strength. Citing gains in builder confidence and housing starts and pre-crisis levels for foreclosures and mortgage defaults, Mr. Blitzer said that the outlook for housing in 2015 should be "stable to slightly better."

Analysts said that higher inventories of available homes had slowed home price growth. Cooling home prices allow more buyers into the market, which creates a better balance between buyers and sellers. Rapidly increasing home prices in late 2013 through early 2014 forced buyers onto the sidelines as investors and cash buyers drove home prices higher and raised demand for available homes.

Cities Post Incremental Month-to-Month Gains

Case-Shiller's 10-and 20-City Home Price Indices were 15 and 17 percent below their mid-2006 peaks with 18 of 20 cities tracked showing slower growth in September than in August. Top month-to-month gains were incremental, with Miami, Florida and Charlotte, North Carolina gaining 0.60 percent, Las Vegas, Nevada gained 0.40 percent and Dallas, Texas gained 0.30 percent. Denver, Colorado, Tampa, Florida and Portland, Oregon posted month-to-month gains of 0.20 percent.

Cities posting no month-to-month gain included Los Angeles, California and New York City.

The steepest decline in month-to-month home prices was seen in Washington, D.C. at -0.40 percent., followed by Atlanta, Georgia at -0.30 percent San Francisco, California, Atlanta, Georgia, Chicago, Illinois, Detroit, Michigan and Seattle Washington posted month-to-month declines in home prices of -0.20 percent. San Diego, California and Boston, Massachusetts posted declines in month-to-month home prices of -0.10 percent.

FHFA House Price Index Unchanged in September

The Federal Housing Finance Administration posted no gain on its month-to-month reading for September, although analysts had expected a gain of 0.40 percent from August to September. Year-over-year, FHFA reported a 4.50 percent gain in home prices between the third quarter of 2013 and the same period in 2014.

On a positive note, Seasonally-adjusted home prices for purchase-only transactions rose in 40 of 50 states during the third quarter of 2014. The top five states posting the highest annual home price gains were Nevada, Hawaii, California, North Dakota and Florida.

Buying a Home with a Mortgage? A Quick Guide to Closing Costs and What to Expect

Buying a Home with a Mortgage? A Quick Guide to Closing Costs and What to ExpectWhether you're just starting to shop for a new home or you've already found the perfect new house and you're ready to submit an offer, if you're taking out a mortgage loan to cover some of the home's purchase price you should be aware of the various closing costs you may encounter.

In today's blog post we'll share a quick guide to closing costs and what you can expect to pay when you buy a new home.

What Closing Costs Do Buyers Typically Pay?

As you move forward in the home purchase process you'll incur a variety of fees that cover document preparation, inspections and other services that are required to fully process your mortgage. Your application and processing fees cover the cost of preparing your loan application and submitting it to your lender. Your credit report fee covers the cost of pulling a credit report which is used to assess your suitability for a mortgage and whether your loan is worth the risk.

You'll likely pay an appraisal fee as you'll need a proper appraisal of the home's value, and you may need to pay a flood certification or survey fee depending on where the home is physically located. Additional fees that you may incur include wire transfer fees, commitment fees, courier fees and private mortgage insurance application fees.

Finally you'll also encounter a number of closing costs that aren't directly related to your mortgage, including insurance costs, attorney fees, property taxes, government filing or recording fees and more.

Consider Negotiating with the Seller

It may be worth asking the seller to pay some - or all - of your closing costs, depending on the offer that you've submitted and how strong of a negotiating position you're working from. Trust in your real estate agent's advice in this regard as you'll want to avoid spooking the seller by asking them to cover costs that they didn't anticipate.

As you can see, there are a number of different closing costs that you may encounter when you purchase a new home. An experienced mortgage professional will help you to better understand these costs and can show you areas where you may be able to find some additional savings. When you're ready to buy your next home, contact your local mortgage professional and they'll be happy to share some advice.

What's Ahead For Mortgage Rates This Week - November 24, 2014

Whats Ahead For Mortgage Rates This Week November 24 2014Last week's scheduled economic news included the NAHB/Wells Fargo Housing Market Index, Housing Starts and Existing Home Sales. FOMC meeting minutes were released along with weekly Freddie Mac mortgage rates and weekly jobless claims.

In addition, the National Association of Realtors® suggested that FHA should lower its mutual mortgage insurance premiums (MMI) as its fund for paying claims has normalized since recession.

Homebuilder Confidence Nears Nine-Year High

The National Association of Home Builders/ Wells Fargo Housing Market Index achieved a reading of 58 for November. This was two points higher than the expected reading of 56 and four points above September's reading. This was the fifth consecutive month of readings above 50.

Readings above 50 indicate that more builders are confident about housing market conditions than not. Components of the index improved with builder confidence in present sales of new homes up 5 points to a reading of 62, confidence in sales over the next six months rose by two points to 66, and the reading for prospective buyer traffic rose four points to 45.

Housing Starts Slow, Existing Home Sales Suggest Stronger Housing Market

Housing starts were lower by 2.80 percent in October at a seasonally-adjusted rate of 1.01 million against an expected reading of 1.03 million and September's reading of 1.04 million homes started. October's reading was affected by a 15.50 percent drop in multi-family construction, but single-family home construction increased by 4.20 percent. Analysts noted that the multi-family sector is notoriously volatile.

The National Association of Realtors® reported that the seasonally-adjusted annual rate of existing home sales for October exceeded the expected reading of 5.15 million with 5.26 million existing homes sold. October's reading also surpassed September's reading of 5.17 million previously-owned homes sold. October's reading represented a 1.50 percent increase over September sales of existing homes, and was the highest reading since September 2013.

The median price of previously-owned homes rose to $208,500 in October, which represented a 5.50 percent increase year-over-year. The inventory of homes for sale is higher with a 5.1 month supply of homes available, which was a year-over-year increase of 5.20 percent. Higher inventories of homes available and low mortgage rates were seen as factors contributing to more home sales.

Builders, Realtors® Call for Lower FHA Premiums

Kevin Kelly, chairman of the National Association of Home Builders and the National Association of Realtors® called for the FHA to lower its mortgage insurance premiums. The cost of FHA loans, which require borrowers to pay an upfront mortgage insurance premium and annual premiums that are pro-rated and added to monthly mortgage payments, were seen as an obstacle to first-time and moderate income homebuyers. This request was based on a report that indicated the FHA fund for paying mortgage insurance claims is in the black for the first time since 2011.

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported that average mortgage rates fell across the board on Thursday with the average rate for a 30-year fixed rate mortgage lower by two basis points at 3.99 percent, and the average rate for a 15-year fixed rate mortgage lower by three basis points at 3.17 percent. The average rate for a 5/1 adjustable rate mortgage dropped by one basis point to 3.01 percent. Average discount points remained the same for all loan types at 0.50 percent.

The Commerce Department reported that new jobless claims fell to 291,000 from the prior week's reading of 293,000. Analysts expected a reading of 280.000 new jobless claims, but this was the tenth consecutive week of readings for fewer than 300,000 new jobless claims. The four-week rolling average of new claims rose by 1750 to a reading of 287,500. The four week average reduces the volatility of weekly jobless claims and provides a more accurate reading of unemployment trends.

What's Ahead

Next week's scheduled events include the Case-Shiller 10 and 20-City Home Price Indices, FHFA's House Price Index and New and Pending Home Sales reports. There are no reports set for Thursday or Friday due to the Thanksgiving Holiday.

USDA Mortgages: Take Advantage of These Low-Rate Mortgage Loans to Buy a New Home

USDA Mortgages: Take Advantage of These Low-rate Mortgage Loans to Buy a New HomeAre you thinking about buying a home in a rural or suburban area? If so, you'll want to take a look at the United States Department of Agriculture's mortgage programs as you may qualify for them.

In today's blog post we'll introduce the USDA Rural Development Single Family Housing Guaranteed Loan Program, explain the benefits of this mortgage program and how to determine if you qualify.

What is a USDA Mortgage Loan?

The USDA mortgage program is one of a number of programs in which the federal government will guarantee a mortgage loan as long as the recipient meets certain criteria. The intent of this program is to provide a boost to residents of rural or suburban areas who are struggling to obtain a traditional mortgage.

USDA mortgage loans are an ideal solution for those who are looking for 15 or 30-year amortization periods as they tend to have lower interest rates than mortgages offered by banks and other lenders.

USDA Mortgage Loan Benefits

There are numerous benefits to USDA mortgages that make this an enticing option compared to a mortgage from a traditional lender. As these loans offer full 100 percent financing you won't have to place a large down payment when buying the home. The USDA offers very competitive 15 and 30-year fixed interest rates, something you won't find from many banks or other mortgage lenders.There's also no maximum home purchase price with USDA mortgages, however note that you'll still be limited by your risk and your ability to manage the monthly mortgage payment.

USDA Mortgage Loan Requirements

The USDA mortgage program is open to all homebuyers that meet a number of initial requirements. The home you intend to purchase has to be located in a rural area (as determined by the USDA) and it cannot be a vacation home or investment property. As with any mortgage, you'll need a relatively clean credit history. Finally, note that your annual income will also be assessed and you'll need to prove that you're within 115 percent of the region's median income.

As you can see, the USDA Rural Development Mortgage program can be an excellent option if you're planning on buying a home in a rural or suburban area. Contact your local mortgage advisor today and they can explain the USDA home loan program and answer any questions that you might have.

FOMC Minutes: Economy Growing, Housing Lags

FOMC Minutes Economy Growing Housing LagsMinutes of the Federal Open Market Committee (FOMC) meeting held October 28 and 29 were released Wednesday. The report suggests that the U.S. economy continues to improve, although the annual inflation rate remains near 1.50 percent and short of the committee's goal of 2.00 percent. Falling crude oil prices were cited as a cause of faltering inflation rates. The minutes indicated that FOMC members expect inflation to remain below the 2.00 percent benchmark for the next year or so.

The minutes did not reveal an exact date for raising the target federal funds rate, which is currently 0.00 to 0.250 percent, but analysts expect a rate change in mid-to-late 2015. One committee member said that the Fed should commit to keeping the target federal funds rate at its present level until inflation reaches the Fed's goal of 2.00 percent.

Job Markets Improve, Mortgage Rates Fall

FOMC members said that labor markets had improved "somewhat further." The minutes noted that the national unemployment rate had declined to 5.90 percent in September, which was lower than the FOMC goal of 6.50 percent for national unemployment. While this was good news, FOMC discussed the fact that a significant number of part-time workers suggested under-utilization of the labor force. A combination of stronger labor markets and a 0.25 percent reduction of mortgage rates during the intermeeting period between September 17 and October 28 were seen as positive for housing markets, but the committee noted that mortgage lending standards for single-family homes had not changed much. Lending requirements were more accommodative for commercial real estate.

QE Ends, FOMC Seeks to Maintain "Accommodative" Financial Conditions

FOMC members voted to end asset purchases made under the Fed's quantitative easing program, but said that ongoing reinvestment of principal payments on bonds and MBS with the goal of maintaining "sizeable" holdings of long-term securities. The minutes indicated that this would help maintain "accommodative" financial conditions.

The committee agreed to re-assert its position that although national unemployment and inflation may achieve or surpass FOMC goals, the committee could maintain the target federal funds rate at current levels for "some time" after the benchmarks are achieved. Ultimately, the FOMC's decision to change the target federal funds rate will include thorough and ongoing review of global and domestic economic developments.

Committee members concluded this meeting with a decision to set the next FOMC meeting for December 16 and 17.

Three Key Tips to Help Ensure Your Mortgage Pre-Approval Isn't Declined

Three Key Tips to Help Ensure Your Mortgage Pre-Approval Isn't DeclinedIf you're thinking about buying a new home and using a mortgage to help cover some of the purchase costs, it's a good idea to get an initial pre-approval from your lender before putting in an offer.

In today's blog post we'll share three quick tips that can help to ensure that your mortgage pre-approval isn't declined.

Demonstrate Your Income and Good Credit

A mortgage is a major financial transaction and one that carries a certain amount of risk for the lender. It's your goal to help them see that you have the ability to make your monthly payments and that there is very little risk in approving your mortgage. Be ready to demonstrate all of your sources of income and that your credit rating is clean.

It may be worth paying for your credit report before starting the pre-approval process so you can clean up any black marks or false reports and so that you can see what the lender will see when they check your credit history.

Choose the Right Property at the Right Price

As the home you're buying will be used as collateral to back the mortgage, the lender will need to see that there is enough value in the home to cover the cost of the mortgage should you fail to pay it back. The "loan to value" or LTV ratio is the amount of your mortgage divided by the value of the home. For example, if you're borrowing $150,000 to buy a home valued at $200,000, you'll have a LTV ratio of 75 percent. Keep in mind that each lender will have their own target LTV that they prefer to work with, so you may need to shop around a bit.

Start the Process with Multiple Lenders

Finally, if you feel that your income or credit history isn't perfect you may want to consider visiting a couple of different mortgage lenders to see what they can offer you. There are dozens of different mortgage products on the market today, and each lender has their own set of qualification criteria that they will use to assess risk and whether they feel that you can afford to pay the mortgage back. Getting a second opinion may help you to discover a more suitable mortgage or one with a better interest rate.

As you can see, there are a number of ways that you can work to ensure that your mortgage pre-approval passes without a hitch. For more information about pre-approvals and to get the process started, contact a local mortgage professional today. After you're approved it's only a matter of time before you'll be moving in to your new home.

The Down Payment: Everything You Need to Know About Your Down Payment on a New Home

The Down Payment: Everything You Need to Know About Your Down Payment on a New HomeWhether you're just starting to shop for a new home or you've found the perfect house and are crafting your offer, if you're taking out a mortgage to help cover your real estate purchase you've likely given some thought to your down payment.

In today's blog post we'll explore the topic of down payments and share how the amount you put down on your home will affect your mortgage.

How Your Down Payment Affects Your Mortgage

As you know, your mortgage is essentially a large long-term loan that is paid back with interest over a set time period. If you put a large down payment against the purchase, you will not only reduce the amount that you'll need to pay back, but you'll also reduce the lender's risk and this may allow them to provide you with lower interest rates.

Conversely, if you can't place very much down on your home and you're left borrowing as much as you can you may find that your mortgage comes with higher interest rates or that some mortgage lenders refuse your business entirely.

The Gold Standard: 20% of the Purchase Price

For the vast majority of homeowners it's expected that they will be able to contribute at least 20 percent of the home's purchase price. For example, if you are buying a $200,000 house you'll need to have at least $40,000 available for your down payment. Note that the 20 percent figure isn't a hard requirement; some mortgage lenders will be willing to approve you with less, but you may be subject to private mortgage insurance, higher interest rates and more.

Saving Up Your Down Payment

Depending on your financial situation and the cost of your home you may find that saving up 20 percent of the purchase price to put toward a down payment places a strain on your finances. If you still have a year or more before you're ready to jump into the real estate market, consider putting some money aside each month that can be used for a down payment. If you receive any lump sum payments like a tax return, save this in your down payment fund as well.

As you can see, your down payment is one of the more important considerations you'll have to make when buying your home with a mortgage. If you have questions about mortgages or down payments, be sure to call your local mortgage professional today as they'll be able to share their guidance and expertise to help you make the best financial decision.

What's Ahead For Mortgage Rates This Week - November 17, 2014

Negotiation Tips: How to Ask the Seller to Pay the Closing Costs Last week's housing related news was lean, with no scheduled reports released other than Freddie Mac's primary mortgage market survey.

We'll start with some good news. The University of Michigan / Thompson-Reuters Consumer Sentiment Index reported its highest reading in more than seven years. November's reading of 89.4 surpassed the expected reading of 88.0 and was higher than October's reading of 86.9

Mortgage Rates Near 4.00 Percent, Weekly Jobless Claims Up

Freddie Mac reported a one-basis point drop in the average rate for 30-year fixed rate mortgage from 4.02 percent to 4.01 percent; the average rate for a 15-year fixed rate mortgage also fell by one basis point to 3.20 percent.

The average rate for a 5/1 adjustable rate mortgage rose by 5 basis points to 3.02 percent. Discount points for all three loan types held steady at an average of 0.50 percent.

Weekly jobless claims rose by 12,000 to 290,000 against expectations of 280,000 new jobless claims filed and the prior week's reading of 278,000.

Last week's report was the ninth straight week that new jobless claims came in under 300,000. The reading for the four-week rolling average was 285,000 new jobless claims, which represented an increase of 6,000 new claims.

What's Ahead

This week's number of scheduled economic reports will be more robust. The NAHB Housing Market Index, Housing Starts and the National Association of REALTORS® Existing Home Sales reports will be released.

The minutes of the most recent Federal Open Market Committee (FOMC) meeting of the Federal Reserve will also be released along with weekly mortgage rates and jobless claims data.

Save Money on Your Home Energy Costs This Winter in Just Three Easy Steps

Save Money on Your Home Energy Costs This Winter in Just Three Easy Steps It doesn't matter if you heat your home with electricity, natural gas or some other energy source; prices continue to rise and that means increased heating costs for most of us.

In today's blog post we'll share three easy ways that you can save money on your home energy costs this winter.

Install and Use Programmable Thermostats

Now that Nest and other companies have brought Wi-Fi enabled, programmable thermostats on the market there's very few excuses to avoid using them. At bare minimum you'll want a digital thermostat that can be programmed to turn on and off at certain hours of the day.

For example, you can shut your heat off after leaving for work and have it turn back on again a half-hour or so before you get home. You can do the same at night when you're fast asleep under warm blankets. If possible, try to get a thermostat for each room so that rooms can be heated individually as needed.

Switch Up Your Ceiling Fans

If you have ceiling fans you may not know that by reversing their direction you can keep your rooms feeling much warmer. In the winter you'll want your fans spinning in a clockwise direction, which will push warm air downward into the room where you'll be able to feel it. In the summer you'll want to switch the fans back to counter-clockwise as this will help move warm air towards the ceiling.

Check Your Insulation, Furnace and Ducts Now

Finally, you'll want to check that your home heating system is operating at peak efficiency. If you can access your attic, check to ensure that your insulation is tightly packed and that it's still in good condition. Clean or replace the air filter on your furnace, and check your ducts for any leaks that need to be repaired. If it has been a few years, consider having a professional furnace and duct cleaning to get all of the dust and debris out of the ductwork.

As you can see, a little time spent on home maintenance can end up saving quite a bit in energy costs when the temperatures drop. When you're ready to look at buying a newer, more energy-efficient home, contact your local real estate agent and book a consultation where you can share your needs and price range.

Refinancing Your Mortgage: Understanding the Various Types of Refinancing

Refinancing Your Mortgage: Understanding the Various Types of RefinancingWhether you've been thinking about ways that you can draw on your home equity to fund a renovation project or you want to take advantage of low interest rates before they rise again, refinancing your mortgage is an excellent option.

In today's blog post we'll introduce mortgage refinancing and discuss a few of the ways that you can use this tool to help accomplish your financial goals.

Cash-In and Cash-Out Refinancing

Many homeowners refinance their mortgage in order to take some of the home equity out for other purposes. In a "cash-out" refinancing, you take out a new mortgage loan which is greater in value than your current loan. After paying off the existing mortgage you'll receive a check for the difference which can then be reinvested in home upgrades or put to use elsewhere in your financial portfolio. You may also be able to get a better interest rate in this type of refinancing, saving additional money over the long term.

Do you owe more on your mortgage than your home is currently worth but still want to take advantage of lower interest rates? If so, "cash-in" refinancing is an option that can help you to avoid the mortgage insurance costs that you may be facing when you refinance. As the name implies, cash-in refinancing will provide you with a loan that is for less than the amount that you currently owe, so you'll need to add "cash-in" to make up the difference.

Home Affordable Refinance Program or "HARP" Refinancing

If you find that you're unable to refinance your mortgage as the value of your home has declined, the federal government's Home Affordable Refinance or "HARP" Program may be an option. HARP was developed to assist homeowners in the wake of the 2008 financial crisis and the resulting instability that was caused in the real estate and mortgage markets. If you have been making your mortgage payments on time, have a mortgage guaranteed by Fannie Mae or Freddie Mac and your current "Loan to Value" ratio is greater than 80% it's likely that you'll qualify for HARP refinancing.

The above are just a few of the ways that you can refinance a mortgage to better suit your needs and financial goals. Contact your local mortgage professional today to learn more about refinancing and to discuss how you can tap in to the home equity that you've built up over time.

How to Use a Mortgage Calculator to Determine Your Monthly Payments, Interest and More

How to Use a Mortgage Calculator to Determine Your Monthly Payments, Interest and MoreAre you thinking about using a mortgage to buy a new home? Buying your own piece of local real estate is a major financial investment and one that can require some pretty complex math to fully understand.

In this blog post we'll discuss mortgage calculators and how to use one of these tools to determine your monthly mortgage payments, interest charges, amortization periods and more.

Determining Your Principal and Down Payment Amounts

To get started with a mortgage calculator you'll need to know how the price of the home and how much you intend to contribute as a down payment. Generally speaking you'll want to place a down payment of at least 20 percent in order to avoid having to pay for private mortgage insurance and to give you access to better interest rates.

Choosing Your Interest Rate and Amortization Period

Now that you have an idea of the amount of mortgage financing you'll need, the next step is to choose your interest rate and amortization period. Different lenders will offer different interest rates for every one of their mortgage products, so again you'll want to play around with these numbers and run the calculation to see which combination of mortgage financing, interest rate and amortization period gives you a monthly payment that suits your budget.

Using a Mortgage Calculator for Refinancing

If you're thinking about refinancing your current mortgage you can also use a mortgage calculator to help make the math a bit easier. Simply use your outstanding mortgage balance as the principal amount and then choose an amortization schedule that fits your financial goals. Be sure to keep an eye on your interest payments, as you may find that by refinancing to a longer amortization period your monthly payments go down but your total interest paid is quite a bit higher.

Don't Forget the Closing Costs

Finally, don't forget that there are numerous "closing costs" – fees, taxes and more – which you'll need to factor in to your overall calculation. Closing costs will include everything from home appraisal fees to government filing fees and property taxes, and will vary depending on the home and the city or community you're buying in.

While online mortgage calculators can handle the tricky math to determine monthly payments and interest costs you may still find that you have questions about your mortgage or some aspect of the process. For more information, contact your local mortgage professional and they'll be happy to share their advice and expertise.

What's Ahead For Mortgage Rates This Week - November 10, 2014

Negotiation Tips: How to Ask the Seller to Pay the Closing CostsLast week's economic reports contained mixed reports indicating that the economy continues to recover with occasional "blips" in its progress. Construction spending was lower than expected.

A Federal Reserve survey of senior loan officers indicated that credit standards remain strict for mortgages and other types of lending. According to the survey, a "modest net fraction" of large banks had eased credit standards for prime mortgage lending.

First-Time Homebuyers Struggle as Market Share Hits 27-Year Low

The National Association of REALTORS® (NAR) reported that first-time buyers' share of home purchases has slipped to 33 percent, which was its lowest level in 27 years. According to Lawrence Yun, chief economist for the NAR, high home prices and mortgage insurance costs along with strict mortgage credit requirements continue to sideline first-time buyers.

In other news, the Department of Commerce reported that construction spending dropped by 0.40 percent in September as compared August's reading of -0.50 percent and an expected reading of +0.70 percent. September's reading represented a seasonally-adjusted annual construction spending rate of $950.90 billion.

Mortgage Rates: Average 30-Year Mortgage Rate Tops Four Percent

Average mortgage rates rose last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose by four basis points to 4.02 percent. The average rate for a 15-year fixed rate mortgage rose by eight basis points to 3.21 percent, while the average rate for a 5/1 adjustable-rate mortgage rose by three basis points from 2.94 percent to 2.97 percent. Average discount points remained at 0.50 percent for all three types of mortgages.

This is not altogether bad news, as higher mortgage rates are typically prompted by improving economic conditions. 2014 started with an average rate for 30-year fixed rate mortgages of 4.05 percent.

Labor Reports Suggest Stronger Jobs Markets

Last week's economic news included several reports that indicated improvements in U.S. labor markets. The Department of Labor released its Non-Farm Payrolls report for October with a reading of 214,000 jobs added against expectations of 243,000 jobs added and September's reading of 256,000 jobs added. While this appears contrary to stronger labor markets, analysts said that a new low in the national unemployment rate of 5.80 percent indicated that fewer new jobs were needed. October was the ninth consecutive month reporting 200,000 or more jobs added.

The ADP employment report, which tracks payrolls in the private sector, reported an increase of 5,000 jobs from September's reading of 225,000 jobs to October's reading of 230,000 jobs.

Weekly jobless claims fell to 278,000 against expectations of 285,000 new jobless claims filed and the prior week's reading of 288,000 new claims filed. This reading supports a stronger jobs market and may compel would-be home buyers to enter the market as concerns about unemployment and jobs wanes.

The national unemployment rate reached a new low with October's reading of 5.80 percent. In related news, Fed Chair Janet Yellen indicated in a speech on Friday that the target Federal funds rate will likely rise in 2015, but she gave neither a prospective date nor details about how much the benchmark federal funds rate may rise.

Negotiation Tips: How to Ask the Seller to Pay the Closing Costs

Negotiation Tips: How to Ask the Seller to Pay the Closing CostsYou've found the perfect new house or condo, and you are now preparing an offer that you believe the seller will find tempting enough to accept. However, you know that there are going to be thousands of dollars in closing costs that need to be paid before the sale is completed and you become the home's new owner.

The question is, should you ask the seller to pay some or all of the closing costs? In today's blog post we'll address this question and list a few scenarios in which you may want to consider having the seller pick up the tab.

Ask if You're Offering the Full Listing Price

If you're prepared to offer the full asking price for the home you can certainly include the caveat that the seller assist with some or all of the closing costs. Many sellers will price their home slightly higher than they expect to receive as they believe that buyers will submit low initial offers which need to be negotiated.

For example, if a home is listed at $275,000 a seller might actually be expecting $260,000 or $265,000 for it. You can offer $275,000 but ask that they take care of the closing costs.

Ask if You're Confident the Seller Has Few Other Options

If the home has been on the market for a number of months or if you're fairly confident that the seller isn't going to find much luck elsewhere you can ask them to pick up the closing costs as one of your purchase conditions. You'll obviously want to negotiate in good faith, but if you're coming from a position of strength you can leverage this in to some additional savings.

Ask if You're Ready to Close Immediately

Are you ready to sign on the dotted line today? If you're sure that this is the right home for you, let the seller know that as long as they're willing to assist with the closing costs and accept your bid that you'll start the closing process today. Nearly all sellers will be willing to make a small sacrifice to get the deal done.

As you can see, there are a number of situations in which it makes sense to ask the seller to shoulder some of the closing costs. If you have found a home that you wish to purchase and you'd like advice on how to proceed, contact a real estate agent today. An experience real estate professional can help you craft an offer that the seller won't be able to refuse.

Did You Know That Your FICO Score Can Drastically Affect Your Mortgage? Here's Why

Did You Know That Your FICO Score Can Drastically Affect Your Mortgage? Here's WhyAre you about to apply for a mortgage loan in order to buy a home? If so, you may be curious about your credit score and how this might impact your financing.

Let's take a quick look at how FICO credit scores can affect your mortgage and share a couple of ways that you can boost your score to ensure your application is approved.

What is a FICO Score?

The Fair Isaac Corporation (FICO) is the country's leading producer of credit scoring information and is the primary source that most lenders will check to assess how much risk you present. FICO combines information from credit bureaus such as TransUnion, Experian and Equifax and produces a score ranging from 300 to 850.

The higher your FICO score is, the better your credit history and the lower the risk you present to lenders. If you have a score above 750 you can expect that most lenders will offer you a mortgage and likely a very good interest rate. If you have a score below 620 or 630 you may find it challenging to get approved and below 500 it will be almost impossible.

How Does a FICO Score Affect My Mortgage?

Your FICO score will affect you in two main ways. First, as mentioned above your FICO score will help to determine whether or not you are approved for a mortgage. Second, you'll find that the interest rates offered to you by various lenders will change based on your FICO score. An individual with a score of 800 and very clean credit presents much lower risk than someone with a score of 500, and thus a higher score generally means a lower rate.

How Can I Boost My FICO Score?

If you find that your credit score is a bit low and you're concerned that it will have a negative effect on your mortgage application there are a few steps you can take. First, get a full copy of your FICO score and credit history so you can see who is reporting to the credit bureaus and what information they are providing. You may find that there are mistakes or old items that have not yet been removed which you can then challenge to have taken off of your credit report.

While your FICO score can certainly impact your mortgage and your interest rate you shouldn't let a low score hold you back from applying. Contact your local mortgage professional today to discuss your options and to determine whether or not your credit will cause you to have any issues in securing a mortgage to pay for your new home.

You Ask, We Answer: What is a "Reverse Mortgage"?

You Ask, We Answer: What is a Reverse MortgageIf you've recently considered your options for taking some of the equity out of your home you may have heard about reverse mortgage loans. If you meet the requirements for a reverse mortgage it can be an excellent way to tap into the value of your home, freeing up that cash to be reinvested or used for other purposes.

In today's blog post we'll explore reverse mortgage loans, explaining how they work and whether or not you're qualified to receive one.

How Does a Reverse Mortgage Work?

As the name implies, a reverse mortgage is the opposite of a traditional or "forward" mortgage in which you borrow a lump sum of money from a lender to buy a home, paying it back to them over time. With a "reverse" mortgage, instead of paying the lender you will receive money from them which does not have to be repaid until you are either no longer using that house or condo as your primary home or until you fail to meet the obligations of the mortgage contract.

Note that a reverse mortgage is still a loan, which means you will still be required to pay interest on it. As your loan balance increases with principal and interest each month the amount of equity you have in your home will decrease accordingly.

Do I Qualify for a Reverse Mortgage?

According to the federal Consumer Financial Protection Bureau, there are a number of requirements that you must meet in order to qualify for a reverse mortgage. You must be at least 62 years of age when you apply, the home you're applying with must be your primary residence, and most or all of your outstanding mortgage debt on the home must be paid off.

If you still owe money on your original or second mortgage against the home note that part of the money from the reverse mortgage must be used to pay this debt off.

How Much Can I Borrow in a Reverse Mortgage?

Like any type of loan, the amount of money that you can receive with a reverse mortgage depends on a variety of factors. Your age, the value of your home, any outstanding mortgage debt, current interest rates and Federal Housing Administration requirements will all be taken into consideration when determining how much you will qualify for.

While a reverse mortgage isn't terribly complex, there is certainly more to the process that can be covered in a single blog post. For more information, contact your local mortgage professional today and they can share the specifics of how you might qualify for a reverse mortgage and whether or not it's your best option for making use of some of your home equity.

Have You Had Trouble Getting a Mortgage? Three Tips for Sprucing Up Your Credit Before Reapplying

Have You Had Trouble Getting a Mortgage? Three Tips for Sprucing Up Your Credit Before ReapplyingIf you've had some trouble getting approved for a mortgage recently, you're not alone. Many individuals face mortgage challenges due to past blemishes on their credit reports or a personal financial crisis that resulted in bills not being paid on time.

In this post we'll share three quick tips for sprucing up your personal credit before reapplying for a mortgage. With a bit of luck and hard work you can be on your way to purchasing that new dream home.

Pay Off Your Credit Cards And Lines Of Credit

The easiest way to improve your credit score and prove that you can afford your mortgage payments is to eliminate other forms of debt from your monthly budget. If you have outstanding credit card, student loan or other debts, get them paid off as quickly as possible.

You'll also want to avoid taking on any new loans while you're trying to get your mortgage approved as these are likely to show up on your credit report and can hurt your chances at approval.

Pull Your Credit Report And Look For Errors

If you haven't seen your credit report recently, it might be worth investing in a copy so you can see exactly what your lender sees when they are evaluating you for a mortgage. You may discover that there are errors or inaccuracies that can be cleared off with a quick phone call, such as a past loan that was fully paid or a missed car payment that was reported in error. Every credit report error that you can fix will bring you one step closer to your mortgage approval, so spend a few minutes combing through your report.

Pay All Of Your Bills On Time

Did you know that every overdue bill can leave a negative mark on your credit report? With so many bills to juggle - credit cards, cell phones, utilities and more - it can be tough to keep them all organized and paid before the due date. However, if you're working to secure a mortgage you must keep your bills paid to avoid being reported as a late or overdue payment.

If you've had some trouble getting approved for a mortgage in the past, take a few minutes to contact your local mortgage professional today to ask for their advice. You may find that they have additional tips and strategies that you can leverage to better your chances of being approved.

What's Ahead For Mortgage Rates This Week - November 3, 2014

What's Ahead For Mortgage Rates This Week - November 3, 2014Last week's economic news brought mixed developments as pending home sales moved to their second highest level of 2014.

The Federal Open Market Committee (FOMC) announced the expected end of asset purchases under its quantitative easing program. In its post-meeting statement, the committee noted improvements in overall economic conditions labor markets as indications of better than expected economic trends.

The Case-Shiller Home Price Index reports for August showed continued slowing in housing price gains. Mortgage rates were higher, but consumer confidence exceeded expectations.

Pending Home Sales Rise, Case-Shiller Reports Slower Price Gains

The National Association of REALTORS® reported that pending home sales gained 0.30 percent in September for an index reading of 105 as compared to August's reading of 104.7. Analysts said that lower home prices and more homes available likely brought more buyers into the market.

The S&P Case Shiller 10 and 20-city home price index reports for August showed further slowing in home price growth with a year-over-year reading of 5.60 percent as compared to July's year-over-year reading of 6.70 percent.

This was the slowest price increase since November 2012. Home price growth is slowing as demand decreases. Tight mortgage qualification requirements are likely contributing to lower demand for homes.

FOMC ends QE, Mortgage Rates Rise

The Fed ended its asset purchases under its QE program according to a statement after the FOMC meeting on Wednesday. This move was expected, and the statement repeated its plan to leave the target federal funds rate unchanged for a considerable period after the QE program's conclusion. Analysts interpreted that to mean that no rate change would likely occur until approximately June 2015.

Mortgage rates responded to the demise of QE with an across the board increase. Average rates reported by Freddie Mac on Thursday were 3.98 percent for a 30-year fixed rate mortgage, 3.13 percent for a 15-year mortgage and 2.94 percent for a 5/1 adjustable rate mortgage. Discount points were unchanged at 0.50 percent for all three loan types.

New Jobless Claims Up, But No Big Deal

Housing market trends are connected with what's happening in labor markets. Last week's report for new jobless claims took an unexpected jump with 287,000 new jobless claims filed against predictions of 281,000 new claims and 284,000 new jobless claims filed the prior week. The four-week average for new jobless claims dropped to 281,000 and new claims remained below the 300,000 benchmark for the seventh consecutive week.

October's Consumer Confidence Index rose to a reading of 94.50 as compared to the expected reading of 87.3 and September's reading of 89.0. The Consumer Sentiment Index for October was also showed an increase of 0.50 percent with a reading of 86.9 against a predicted reading of 86.4 and September's reading of 86.4.

What's Ahead

Next week's scheduled economic news includes construction spending for September, Non-farm payrolls, national unemployment, and the ADP employment report. Regularly scheduled reports on mortgage rates and new jobless claims will be released on Thursday.

Buying a Vacation Home? A Quick Guide to Renting Out Your Second Home to Generate Income

Buying a Vacation Home? A Quick Guide to Renting Out Your Second Home to Generate IncomeAre you thinking about buying a second home to spend some time in when you're on vacation? Whether you're picking up a small house near the beach or you're looking at a ski-in/ski-out condo at your favorite ski resort, if you're only going to be in the home for short periods each year you may want to consider renting the property out the rest of the time to generate some additional income.

In this post we'll share a few tips for getting your property ready to rent to short-term visitors and how to get things started.

Preparing Your Home For Use As A Rental

Before you list your vacation property up for rent you'll need to get it ready for your first tenants. Spend some time walking through the home to determine what's missing and what might need to be upgraded.

Do you have a few spare sets of sheets and towels? Are all of the kitchen appliances in top condition? If you're going to be supplying soap, shampoo and other toiletries, are you fully stocked?

Remember – your goal should be to impress each and every client to ensure they leave a positive review and come back again in the future.

Hiring Housekeeping And Property Management Services

Since you likely don't live in the area around your vacation home, you'll want to contract out the cleaning and management to local vendors who specialize in managing vacation properties. It should be relatively easy to find these companies with a quick web search, but be sure to ask for recent references so that you can rest easy knowing your home is in good hands.

Listing Your Rental On Popular Websites

Once your home is prepared and you have your team lined up, it's time to list your property on websites such as VRBO, HomeAway and AirBnB. Browse through other local listings to see how your competition markets themselves and to get an idea of how much you should be charging on a nightly or weekly basis. Also, remember you'll need to set up a PayPal account or figure out another way for your clients to pay for their stay.

Case-Shiller 20 City Home Price Index And FOMC QE Update

Case Shiller 20 City Home Price Index And FOMC QE UpdateAccording to the S&P Case-Shiller 20 City Home Price Index, Home prices rose by 0.20 percent in August. Three of the 20 cities tracked saw home prices drop, while Detroit, Michigan posted the highest price growth. The seasonally adjusted growth rate for cities tracked declined by 0.10 percent as compared to a decline of 0.10 percent in July.

Detroit led monthly home price growth with a gain of 0.80 percent. Dallas, Denver, Colorado and Las Vegas, Nevada posted gains of 9.50 percent as compared to July. Cities posting declines in home price growth included San Francisco at -0.40 percent, Charlotte, North Carolina and San Diego, California at -0.10 percent.

Home prices increased by a seasonally-adjusted year-over-year rate of 5.60 percent in August, which was the lowest reading since November 2012. Year-over-year home prices grew by 6.70 percent in July. August home prices were 16 percent lower than their 2006 peak.

The Case-Shiller National Home Price Index posted a year-over-growth rate of 5.10 percent. This index covers all nine U.S. census regions.

Analysts note that slower growth in home prices will likely attract more buyers, but is a sign of overall decline in demand for homes. August home prices were 16 percent lower than their 2006 peak. As the jobs market continues to improve and if mortgage rates remain low, more buyers are expected to enter the housing market.

FOMC Statement: QE Ends, Labor Market Forecast Brighter

In its customary post-meeting statement, The Federal Open Market Committee (FOMC) of the Federal Reserve announced that it voted to reduce asset purchases under its current quantitative easing (QE) program to zero. The committee's decision concluded 37 consecutive monthly purchases of Treasury bonds and mortgage-backed securities.

FOMC cited "substantial improvement" in the outlook for the labor market since the inception of QE purchases, and also noted "sufficient underlying strength in the broader economy" as the basis for the committee's decision. The demise of QE was no surprise as FOMC has consistently tapered asset purchases each month along with its advisory that it planned to end asset purchases under the current QE program this year.

The FOMC characterized the pace of economic improvement as "moderate," but also said that "labor market conditions improved somewhat further with solid job gains and a lower unemployment rate." Along with the stronger outlook for jobs, the Fed noted that "underutilization of labor resources is gradually diminishing."

The committee held to its position that it would not increase the target federal funds rate for a "considerable time" after the quantitative easing program ended. Analysts following the Fed estimate that no changes to the federal funds rate will be made until June 2015 or later.