From “Listing Agreement Adendum” at NAREP.net
As with any purchase you make, you want the best value possible. Value is a combination of professional advice, service and price. With a mortgage, the price is a combination of interest rate and points.* The terms in effect when you apply for a mortgage may seem good, but rates and points fluctuate, sometimes on a daily basis. So rates and charges could be higher on the day you actually close. The way to ensure you get the rate and points you want is to lock in the rate at some point in the process.
A lock-in, also called a rate-lock or rate commitment, is a lender’s promise to hold for you a specific interest rate and a specific number of points, typically for a stated period of time, while your loan application is processed.
There are different programs and time periods offered and lock-in requirements vary by state and lender. But locking in a rate will ensure your mortgage cost stays within your budget.
Please call us or reply to this email to review the lock-in programs available. Or let us help you with any questions about home financing or re-financing…and best wishes in this and all your endeavors!
* Points, or origination fees, are charged by the lender that are paid by the borrower at closing but can sometimes be financed by adding them to the amount of the mortgage. One point equals one percent of the loan amount.
Here’s what to make room for in your homeowner’s budget.
Principal and interest payment on your mortgage
Real estate taxes
Homeowners Insurance–ask insurance agent for an estimate
Heat–check owner’s current bills
Optional costs: water, sewer, trash collection, homeowners association dues
Go to your home inspection, ask questions, and hold on to the report. Some repairs may be done by the seller. But some things may be future concerns, like a roof, furnace, or water heater. Inspectors can tell you when major components may need replacing. A furnace can last 12 to 15 years, a water heater, 10 to 12 years.
Address all problems when they come up. A loose bathroom tile can be fixed for a few dollars. Ignore it and you’re rebuilding a wall. Set aside $500 to $1,000 a year for these small repairs.
Estimate when you’d like upgrades done. Can you live with those kitchen countertops another two years, or another two months? When will you need a new deck? What about landscaping? Will you put on an addition down the road? Decide what you want, get rough estimates, and start putting money aside.
Experts suggest homeowners have 1% to 3% of the purchase price of the home socked away for improvements and surprise expenses.
If you have any questions about this or any other part of the home buying, financing, or refinancing experience, please contact us today…and best wishes in this and all your endeavors!
QUOTE OF THE WEEK… “Energy and persistence conquer all things.”–Benjamin Franklin
INFO THAT HITS US WHERE WE LIVE… All who work in the housing market, from realtors to builders to lenders, have certainly shown energy and persistence. Although we’re now in recovery, it’s at a slow pace, so those qualities are still needed to keep things moving along. But the signs are encouraging, as January Existing Home Sales were up a tick to an annual rate just under 5 million units. Sales are up 9.1% from a year ago, the median price of an existing home is up 12.3% versus a year ago, and the supply is now down to 4.2 months.
Housing Starts were down 8.5% in January, but, remember, they shot up 15.7% in December. They’re still running at a not bad 890,000 unit annual rate. Also, the January drop was all due to the volatile multi-family sector, as single-family starts were at their highest level since 2008, up 20% from a year ago. Builders are optimistic, as building permits went up 1.8% in January and are now up 35% from a year ago. Fannie Mae’s monthly economic outlook reported that home price growth and the increase in home building suggest that housing is “on a sustained growth path.” Gotta love that word “sustained.”
BUSINESS TIP OF THE WEEK… Successful people love what they do, trust their intuition, and are good at finding solutions. Once they understand a problem, they revel in using their intellect, inspiration, and observations to solve it.
>> Review of Last Week
WANING ENTHUSIASM… Following Presidents’ Day Monday, there were only four days of trading, not nearly enough time for investors to get up much enthusiasm for stocks. The Dow held steady, but the S&P 500 ended its seven-week winning streak, while the Nasdaq took a deeper dive. Economic reports went from in-line to disappointing. The minutes from the last Fed meeting revealed Committee members didn’t see much change to the economic outlook. And many are worried about the economic impact of spending cuts when the sequester kicks in March 1 unless Congress reaches a compromise.
The Philadelphia Fed Index of manufacturing activity in that region fell to –12.5 in February from –5.8 the month before. Inflation still seems under control with January PPI producer (read wholesale) prices up just 1.4% in the past year. The CPI showed consumer prices unchanged in January, up 1.6% from a year ago. Core CPI, excluding volatile food and energy prices, was up 0.3% in January and is up 1.9% versus a year ago. This is still within Fed guidelines. Best news in the report was that inflation-adjusted hourly earnings were up in January and are up the last three months at a 4.4% annual rate.
The week ended with the Dow up 0.1%, to 14001; the S&P 500 down 0.3%, to 1516; and the Nasdaq down 0.9%, to 3162.
With the S&P 500 drifting downward, Treasuries rallied as investors sought the safe heaven of bonds. The FNMA 3.5% bond we watch ended the week up .01, at $105.09. The national average 30-year fixed rate mortgage was up a smidge in Freddie Mac’s Weekly Survey, though rates still remain near historical lows. Freddie Mac’s chief economist commented, “Mortgage rates have been relatively stable, hovering near record lows, for the past four weeks, which is helping to spur new home construction.”
DID YOU KNOW?… The Census Bureau reported the vacancy rate for homeowner housing was down to 1.9% in Q4 of 2012, a level not seen since 2006, before the peak of the housing boom.
>> This Week’s Forecast
NEW AND PENDING HOME SALES, MANUFACTURING, GDP… We’ll get more on the housing recovery, which appears to be proceeding, albeit slowly, with both January New Home Sales and Pending Home Sales expected up for another month. Manufacturing is forecast down a little in February, although both the Chicago PMI and ISM Index are predicted to remain in expansion territory.
We’ll get the GDP – Q4 Second Estimate on Thursday and, happily, it’s expected to be showing some growth in the economy, versus the contraction reported in the Q4 Initial Estimate. We should also look at the Core PCE Prices inflation reading on Friday, which is forecast still under control.
It’s time to make your move.
QUOTE OF THE WEEK… ”Sometimes we stare so long at a door that is closing that we seek too late the one that is open.”–Alexander Graham Bell, American inventor
INFO THAT HITS US WHERE WE LIVE… There is more and more evidence that the door of opportunity is opening in the housing market. On Valentine’s Day Freddie Mac showed us some love in their Housing Market Outlook, which projected starts UP 22% this year, to a 950,000 unit annual rate. Their chief economist commented, ”Across the nation, most local housing markets have room for sustainable growth…. As the broader economy heals, expect to see more good news, with house prices continuing their recent upward trend, and home sales and housing starts continuing to post strong growth rates.”
Not to be outdone, the National Association of Realtors (NAR) reported Monday that the recovery in real estate values is picking up steam. Median home sale prices were UP 10% in Q4 over last year and 133 of 152 metro areas posted yearly gains, versus just 29 metro areas a year ago. The NAR’s chief economist commented, “Home sales are on a sustained uptrend…fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising.”
BUSINESS TIP OF THE WEEK… With social networks, focus on building a manageable number of meaningful connections, instead of going for hundreds of weak connections. Seek quality, not quantity.
WALL STREET’S POKER FACE… It was hard to gauge the mood of investors last week. One stock index was up and two were down. The up one was the broadly-based S&P 500, now posting gains seven weeks in a row for the first time in over two years. But these up and down moves were so small, they revealed nothing about investors’ economic feelings. They may be simply bracing for a correction, which could be triggered by the sequestration — the automatic spending cuts now scheduled for March 1 if Washington can’t come up with a deal.
The economic reports should have made people feel better. Retail Sales, NY Empire Manufacturing, and Michigan Consumer Sentiment all came in meeting or beating expectations. The only one that missed was Industrial Production, down 0.1% in January, but November and December were revised upward considerably.Weekly jobless claims dropped to 341,000 and continuing claims dipped to 3.11 million. These figures have some economists expecting moderate growth in payrolls for February.
The week ended with the Dow down 0.1%, to 13982; the S&P 500 UP 0.1%, to 1520; and the Nasdaq down 0.1%, to 3192.
The positive economic data created selling pressure in the bond markets, pushing prices lower. The FNMA 3.5% bond we watch ended the week down .05, at $105.08.Freddie Mac’s Weekly Survey showed national average mortgage rates holding near historical lows, the 30-year fixed rate unchanged for the third week in a row. The Mortgage Bankers Association reported demand for purchase loans UP 15% from a year ago.
DID YOU KNOW?… “Crowd funding” is the process of raising money for an organization or project from a large number of individual investors, typically through the Internet.
INFLATION, HOUSING, AND THE FED’S MINDSET… Among inflation readings, the Fed watches Core PPI for wholesale and Core CPI for consumer prices, which exclude volatile food and energy , and those are forecast in safe territory. Homebuilders chime in with January Housing Starts perhaps down a tad, and Building Permits, up. January Existing Home Sales should hold just under 5 million units annually.
The Fed’s mindset at their last meeting will be revealed when the FOMC Minutesare released. These will be parsed by the pundits for the central bank’s take on the economy.
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Forecasting Federal Reserve policy changes in coming months… Unless we hear anything to the contrary in the Fed Minutes this week, economists see the Fed keeping the Funds Rate super low for quite a bit longer. Note: a <1% probability of change is a >99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%