Home Purchase with a Reverse Mortgage

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BUILDING THE DREAM OF HOME OWNERSHIP

Reverse Mortgages

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A reverse mortgage to purchase a home may help some seniors finance a new place to live. Most seniors take out a reverse mortgage to help them stay in their existing home as they get older, but seniors can also take advantage of this financing option to finance a new residence.

Many of us have seen the commercials and heard the term “Reverse Mortgage”, otherwise known as Home Equity Conversion Mortgages or HECM when insured by HUD, but not sure how they work. The program is offered by HUD for those among us who are 62 years of age or older. It’s a way some homeowners can borrow against the equity in their home without having to make monthly repayments and you can borrower in several different ways. For example, you can receive a lump sum or establish a home equity line of credit and draw against the account as funds are needed.

You continue to live in your home, maintain your home and pay all the taxes, insurance and association dues until the last borrower leaves the home.

There’s a lot more caveats you need to know before you determine if a reverse mortgage is right for you, and I’ll break down your options in this post so you’ll have a good outline to work with when talking with your lender.

First and foremost a reverse mortgage should not be gone into lightly. Individuals considering a reverse mortgage not only should get all the facts from their lender, but I’d recommend discussing this option with your closest family members before making any decision.

HUD also wants you to know what is involved and requires any potential home owner considering a reverse mortgage get the facts by attending a counseling course with a HUD certified nonprofit agency, who will explain the process. As with any mortgage these reverse mortgages have pros and cons.

Let’s address some basic facts that make a reverse mortgage appealing to some.

  1. You do not make payments and the repayment terms are not required until the end of the loan term.
  2. The money you receive can be taken in different forms:
  3. It can come as an initial payment of your equity;
  4. Tenured or monthly payments that continue throughout your life or as long as you live in the home;j
  5. Term Payments – Loan terms which you and your lender agree upon;
  6. Line of Credit;
  7. Modified Term payment (a Combination of payment plan and line of credit);
  8. Modified Tenure payments (A Combination of a tenure plan and line of credit)
  9. Other options may exist;
  10. The money you receive is generally not considered taxable income, but I strongly recommend you speak with an accountant to make sure before making any decisions.
  11. You can eliminate mortgage payments by paying off your existing mortgage;
  12. Your income and credit score is not a consideration when qualifying for a reverse mortgage.

Your principal balance will be determined by a formula of your age and the market value of your home at the time you take out the HECM Reverse mortgage, if the market goes up or down your loan payoff remains the same. Beware though; there are some products that are not insured by HUD where you could be personally liable if your mortgage exceeds the then market value of your home. If you are considering a reverse mortgage, make sure it is insured by the Department of Housing and Urban Development.

Let’s discuss some of the drawbacks:

  1. The reverse mortgage is complicated and why you need to attend counseling course with a HUD certified nonprofit agency. These agencies aren’t interested in making a commission and not affiliated with the lenders. Be sure to ask all the questions you want and don’t stop asking until you feel confident you understand how the program works;
  2. They can be relatively expensive compared to other alternatives, so it’s important to compare what several reverse mortgage lenders offering both in terms and lender costs to prepare service your reverse mortgage;
  3. Most mortgage lenders only offer the reverse mortgage as an Adjustable Rate Mortgage (ARM);
  4. A reverse mortgage can affect your eligibility for public assistance benefits such as SSI; Medicaid and Medical, so get the fact directly from those agencies before proceeding with a reverse mortgage;
  5. It’s likely to reduce the equity in your home and the estate you leave to your heirs;
  6. There are many rules that accompany a Reverse Mortgage such as, you cannot rent the home or leave the home for a continued period of time or your loan may become due and payable;
  7. If you want to leave your home to your heirs, you will leave them only with the equity in your home left after paying in full the Reverse Mortgage;
  8. A spouse not on the HECM note and mortgage could have to leave the property upon the death of, or a permanent change of the legal address for the borrowing spouse.

So, how does the reverse mortgage term end? The loan term ends when the last surviving borrower dies; moves away; permanently leaves the home; or the home is sold and title to the home is transferred.

When the term ends what will be owed is the money you borrowed, the accrued interest and any financed fees, or loan costs you incurred to establish your reverse mortgage.

As individuals are living longer, we need to plan financially and see to it that there is enough cash to live comfortably in our retirement years and you don’t want to outlive your cash. As pensions get cut or removed and as other expenditures emerge, seniors are now forced to take a look at other alternatives. Some have returned to work to make ends meet, while others have cut their expenditures, and can’t enjoy their retirement. Many elderly homeowners are living with the solution that can help them fulfill their retirement years and might not even realize it, but first and foremost, be an informed consumer and seek the advice of trusted advisors like your accountant, your lawyer and your family.

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A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option  to “Create A Printable PDF of the Presentation”.

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One Ala Moana Condominiums

BUILDING THE DREAM OF HOME OWNERSHIP

One Ala Moana Condominiums

Ala Moana, Honolulu, HI Homes for Sale 

One Ala Moana

One Ala Moana Condominiums

Living life above on of the largest outdoor malls in the US offers the best assortment of dining, entertainment and shopping in Hawaii. One Ala Moana is a prestigious condominium development, created by renowned Honolulu based Kobayashi Group and The MacNaughton Group.

A thoroughly modern luxury development, One Ala Moana gracefully accentuates the Ala Moana Center hub of Honolulu, while offering residents unparalleled access to the best of Honolulu shopping, entertainment, and beautiful beaches.

One Ala Moana is centrally located for Honolulu residents, Ala Moana Beach park, offers a wide gold-sand beach that is over a half-mile long, big grassy areas, banyans and palm trees. The park boasts lifeguards, showers, restrooms, phones, tennis courts, picnic tables, food concessions, a music pavilion, and the water is calm because the beach is protected by an outer reef, making it a popular spot for long-distance swimmers and small children.

Residents at One Ala Moana also enjoy easy access to world famous Waikiki Beach, the beachfront mecca for surfers, sunbathers, and millions of visitors each year.

The amenities are top of the line and included an excellent concierge service. Units have zoned central A/C, kitchens with Sub-Zero, Miele and Wolf appliances. One Ala Moana also brings new, green technology in your daily life that make this a sensible place to call home. The hot water is recirculated In-Unit, as well as being warmed partially by the A/C’s heat return. This is just one of the features and innovations of the building that have earned its full LEED Certification.

One Ala Moana have 12 different floor plans to choose from, ranging from one to three bedroom units that make up the vast majority of the building. Then there are the views if you’re fortunate to come upon one of the top floors facing south, which has breathtaking scenery of the ocean.

Being on top of the multi-level parking garage, means that the lowest residential floor is the 8th and further up than you’ll often find. Units numbered 00 to 10 look out across the top of the shopping center to Ala Moana Beach Park, Diamond Head, and the Pacific beyond. Although these units are on the Mauka side of the mall, these units have uninterrupted views that will remain, due to the park that lies between Ala Moana Center and the Pacific. Units numbered 11 to 15 have mountain views that are equally spectacular, plus a better breeze and cooler temperatures.

The 6th floor amenity deck at One Ala Moana is wonderfully laid out with green spaces, enticing blue swimming and whirlpool, barbecue grill, tennis court, and a footpath encircling the outside to enjoy a stroll in its well manicured setting, all while being in the comfort and security of your residence. And, for the animal lovers among us you’ll find the dog park to spend some stress-breaking time with man’s best friend.

There’s a lot more to discover at One Ala Moana, and the development speaks for itself.

HOME OWNERSHIP TOOLS

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A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option  to “Create A Printable PDF of the Presentation”.

What Home Buyer’s Need to Know

January 25, 2016

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Last week we received economic reports from The National Association of Realtors®, on Existing Home Sales and the National Association of Home Builders on Housing Starts, and  as well as other scheduled reports on new jobless claims and mortgage rates.

The National Association of Realtors® reported that sales of Existing Home Sales rose to 5.46 million sales on an annual seasonally adjusted basis in December and surpassed most expectations of 5.21 million sales and November’s reading of 4.76 million sales.

Most housing analysis agree that November’s low reading was due in part by new mortgage rules regarding new settlement disclosure requirements, which delayed some closings and pushed them into December.

This percentage of available previously owned homes are the lowest inventory since January 2005, and high demand for homes and a short supply continued to keep would be home buyers out of the market.  The home supply of pre-owned homes on the market for December came in at 3.90 months, and much less than needed for a balanced supply to demand ratio, putting even more pressure for price increases. The national average price of a pre-owned home rose 7.60 percent in December to $224,100.

New Home Starts

Annual Housing Starts dipped in December to 1.15 million against expectation of 1.23 million and November’s reading of 1.18 million. Home Builders, however, constructed more homes in 2015 and at their highest rate since the recession, but we still have a long way to go before they reach pre-recession levels.

While December’s reading fell short of expectations, building permits issued increased 12 percent and housing starts increased nearly 11 percent year-over-year. Home builders continue to cite shortages in land and labor as a major obstacle and housing starts are seen as a partial solution to the overall shortage (new and existing) of available homes.

pmms_chart (2)

Freddie Mac’s survey of mortgage lenders reported that mortgage rates fell again last week. The average rate for a 30-year fixed rate mortgage dropped 11 basis points to 3.81 percent; the rate for a 15-year fixed rate mortgage fell by nine basis points to an average of 3.10 percent. The average rate for a 5/1 adjustable rate mortgage dropped 10 basis points to 2.91 percent. Discount points averaged 0.60, 0.50 and 0.40 percent respectively. Last week’s turbulence, which you might have noticed in global stock markets were certainly a contributing factor to lower mortgage rates.

New jobless claims rose to a seven week high at 293,000 new claims, as compared to expectations of 279,000 new claims and the prior week’s reading of 283,000.  The four-week rolling average jumped by 6.500 new claims to an average of 285,000.  Layoffs of temporary holiday workers were cited as contributing to higher first-time claims, and we want to keep a close eye on these numbers in the coming weeks.

What’s Ahead for the Week?

We’ll get New and Pending Home Sales, Case-Shiller Home Price Indexes, FOMC Statement, Consumer Confidence and Sentiment, as well as scheduled reports on mortgage rates and new jobless claims.

HOME OWNERSHIP TOOLS

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A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option  to “Create A Printable PDF of the Presentation”.

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What Home Buyers Need to Know

January 18, 2016

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Last week’s news and reports related to housing included the Fed’s Beige Book report, Retail Sales, Consumer Sentiment, and January’s Empire State Index.

According to the Fed’s Beige Book report in January, we’ve seen strength in housing, but agriculture, energy and the manufacturing sectors aren’t doing as well. New York’s Empire State Manufacturing Index for January backed up the other reports with a sharp drop. New York manufacturing has hit its lowest level since the 2009 and mirrors the American manufacturing sector.

Earlier this month, we have learned the ISM manufacturing index fell to 48.2 in December, reflecting a nationwide recession in manufacturing, while The Empire State survey’s new orders index, which is an indicator of future activity, plunged 17 points to -23.5.

The reports point to a struggling American manufacturing sector, which has seen the demand for exports diminish, as the strong dollar sees slowing growth overseas. That doesn’t bode well for getting would-be home buyers off the fence, and shows us as we move into 2016, much work still needs to be done to see a full recovery on Main Street. 

General Busines Conditions for Jan 16

U.S. GDP expanded at a modest rate of 2.10 percent in the 3rd quarter. Though not stellar, but compared to other G9 economies (Europe’s at 1.60 percent, Japan’s at 1.60 percent and Canada’s at 1.20 percent), the U.S. is growing. In comparison, China’s post 2009 GDP peaked at 12 percent and is now at 6.9 percent, a 48 percent decline in 6 years.

As the U.S dollar continues to have positive tailwinds, the impact on other currencies is not so constructive, and will continue to make our goods and services even more costly and putting more pressure on manufacturing in 2016.

Over the past 19 months the Euro has declined 23 percent, the Yen is down 14 percent, the Australian dollar is off 25 percent, and the Canadian dollar has dropped by 29 percent, make their goods and services more attractive in price that American goods and services.

The price of Light crude oil, another casualty of the rising US Dollar, is off by a staggering 69 percent since mid-2014. That’s good for households, but not so much for energy jobs and households that are relying on that income.

Bottom line: Positive drivers continue to advance the U.S. Dollar verses other G9 currencies. Impressive employment gains and GDP numbers are just some of the markers that are pushing the US Dollar higher.

The USA is the first of the G9 economies that is feeling confident enough to begin raising its interest rates. And with solid fundamentals, the Fed will be under pressure to keep raising rates in the months to come.

In response, many world currencies and commodities will continue to feel strong headwinds in the months ahead.

In other news, retail sales posted a negative growth of -0.10 percent in December against an expected reading of -0.20 percent and November’s reading of +0.40 percent. December retail sales not including automotive also posted a reading of -0.10 percent as compared to expectations of +0.20 percent and November’s reading of 0.30 percent.

Freddie Mac provided us with it weekly survey of mortgage rates last Thursday, and mortgage rates fell across the board. The average rate for a 30-year fixed rate mortgage dropped by five basis points to 3.92 percent; the average rate for a 15-year mortgage rate also fell by five basis points to 3.19 percent. The average rate for a 5/1 adjustable rate mortgage was eight basis points lower at 3.01 percent. Average discount points were 0.60, 0.50 and 0.40 percent respectively.

pmms_chart (1)

New unemployment claims rose to 284,000 and that was higher than expected by 9,000 additional claims and the prior week’s reading of 277,000 claims. Jobs analysts pointed to the jump in claims as a result of job losses related to temporary holiday positions, but noted that last year’s momentum of falling jobless claims has slowed.

Consumer Sentiment rose, according to the University of Michigan. Lower prices were credited for the boost in consumer confidence in current economic conditions.

What’s Ahead for the Week?

This week we’ll get the National Association of Home Builders Housing Market Index, Housing Starts, Consumer Price Index and Core Consumer Price Index. 

HOME OWNERSHIP TOOLS

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A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option  to “Create A Printable PDF of the Presentation”.

What Home Buyer’s Need To Know

January 11, 2016

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As we moved in our first full week of 2016 few reports on housing or mortgage related news was reported. We did, however, get data on Construction Spending and some labor reports.

Both of these sectors in our economy have profound impacts on housing. Construction Spending provides indications of future housing supply, as well as Builder Confidence. Data coming for the labor markets gives us a sense of economic conditions overall and how those factors influence would-be home buyers.

In the report released by the Commerce Department, construction spending dropped by 0.40 percent in November to a seasonally adjusted annual reading of $1.12 trillion. November’s reading was short of the expected reading of 0.90 percent, which was based on October’s original reading of a 1.00 percent increase in construction spending. October’s reading was later revised downward to 0.30 percent. Even with the unexpected decline, November’s construction spending was 10.50 percent higher year-over-year.

Private construction spending decreased by 0.20 percent in November, but it’s up 12.10 percent year-over-year. That’s good news, considering that the housing markets have been hard squeezed due to short supplies of available homes. New construction of affordable housing is a key factor to ease the shortage and should motivate would-be home buyers to stop renting and taking advantage of many of the great opportunities out there to purchase a home.

Fortunately, residential construction was up 0.30 percent in November and increased 10.80 percent year-over-year, but we are still well off our peaks before the housing bust in 2007.

According to the Labor Department, 292,000 new jobs were added in December, which resulted in the fifth consecutive year where jobs grew by 2 million or more year-over-year! Upward revisions to the jobs reports for October and November supported stronger economic conditions. October’s reading was adjusted from 298,000 new jobs to 307,000 new jobs; November’s original reading for new jobs was raised from the 211,000 jobs added to 252.000 jobs added.

Last week’s positive jobs reports were released against the turmoil in the Chinese market and concerns the China’s economy is slowing. As the second largest global economy, China’s economy could influence global financial markets and economic conditions if it experiences serious difficulties.

New weekly jobless claims fell to 277,000 as compared to expectations of 275.000 and the prior week’s reading of 287,000 first-time claims. Fewer first-time claims for jobless benefits point to stronger economic conditions in general as evidenced by expanding job markets. National unemployment held steady 5.00 percent, which met expectations and the same as November’s reading.

pmms_chart (6)

Freddie Mac’s survey of lenders and interest rates were mixed. The average rate for a 30-year fixed rate mortgage dropped four basis points to 3.97 percent; the average rate for a 15-year fixed rate mortgage rose two basis points to 3.26 percent and the average rate for a 5/1 adjustable rate mortgage rose by one basis point to 3.09 percent. Last week’s discount points averaged 0.60 percent for 30-year fixed rate mortgages, 0.50 percent for 15 year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

What’s Ahead for the Week?

This week we’ll get economic reports that include job openings, retail sales the Federal Reserve’s Beige Book report, Freddie Mac’s Lender Interest Rate Survey, New Jobless Claims, and Consumer Sentiment. 

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A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option  to “Create A Printable PDF of the Presentation”.

What Home Buyers Need to Know

What Home Buyers Need to Know

January 4, 2016

Stephens Short Banner

2015 ended with reports coming from the S&P/Case Shiller Home Prices, Pending Home Sales, and Consumer Confidence.

The Case-Shiller Home Price Index posted double digit gains in housing for October. The Case-Shiller Home Price Index, is a look-back index and why we are getting October’s data now. Denver, CO, Portland, OR and San Francisco, CA all tied for the highest home price gains in October, with year-over-year home price gains of 10.90 percent.

The nation’s lowest annual price gains came from Chicago, IL at just 1.30 percent and coming second to last was Washington, D.C with a year-over-year –reading of just 1.70 percent.

Overall home prices have risen at their fastest rate since August 2014 according to the Case-Shiller Home Price Index, while month-to-month home prices showed mixed results in October.

Miami, Florida posted the highest month-to-month gain at 0.70 percent, while San Francisco, CA, Phoenix, AR and Portland, OR posted gains of 0.60 percent.

Cities that showed month-to-month declines in home prices included Chicago, IL at a decline of 0.70 percent, while Cleveland, OH and San Diego, CA posted declines of 0.40 percent. Washington, DC has the least month-to-month decline, coming in at 0.30 percent.

Home prices in Boston, MA and Las Vegas, NV were unchanged in October from September’s reading.

This month’s report show us that according to the index, home prices remain (on average) 11 to 13 percent below their 2006 peaks, but furthermore tell us that home prices are 36 percent higher than the lowest price point in 2012.

The National Association of Realtors® provided its report on Pending Home Sales and showed sales dipped 0.90 percent in November after posting a 0.20 percent gain in October, while most housing analysts were banking on a 1.0 percent gain for November.

Pending Home Sales saw their peak in May 2015, but since then short supplies of affordable housing have diminished in many parts of the country. In turn, shortages create rising prices, which have caused many would-be home buyers to remain on the fence.

November’s Pending Sales were still 2.70 percent higher, based on year-over-year readings.  Although the index has increased year-over-year for 15 consecutive months, November’s annual gain has been the smallest since October 2014, which came in at 2.6 percent.

Regionally the Northeast reported a reading of 91.8, which was nearly three points lower than October’s report.  The Western region posted a reading of 100.4, or a decline of nearly 6 points.  The Midwestern region posted gains, but only at one point with a reading of 104.9. The South had the best reading of 119.9, which represented an increase of 1.50 percent.

The National Association of Realtors® expects sales of existing homes to reach 5.25 million in 2015, and that would be the highest reading since 2006. Currently, the national median price for an existing home is $220,700 and six percent higher than in November 2014.

pmms_chart (5)

Last Thursday Freddie Mac provided us with their lender survey, on average mortgage rates and showed rates rose across the board week-over-week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 4.01 percent, while the average rate for a 15-year fixed rate mortgage was two basis points higher at 3.24 percent. Discount point averaged in at 0.6 percent.

Ending the year on a positive note was Consumer Confidence with a year-end increased reading of 96.5 in December, as compared to November’s upwardly revised reading of 92.6.

What’s Ahead for the Week?

This week we’ll get reports on construction spending, Non-farm Payrolls report and the ADP payroll reports.

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A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option  to “Create A Printable PDF of the Presentation”.

Energy Efficient Tax Credits

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Honolulu’s Mayor signed into law last month, new provision that ranges from rezoning land in Waikiki to ensuring that homeowners who are considering renovating their homes get a special property tax exemptions.

Bill 57 rezones two blocks of land facing Kuhio Avenue between Kaiulani Avenue and Lilioukalani Avenue in Waikiki from “apartment precinct” to “apartment mixed-use sub-precinct” and “public precinct.” According to the city Department of Planning and Permitting, private landowners and the city sought rezoning to open up the possibility of redeveloping the blocks for commercial use, although no specific development is yet planned.

Bill 66, which amends the real property tax law so that homeowners who aren’t living in their homes due to renovation can still get their homeowner tax exemptions for up to two years, as long as they don’t sell or rent out their property during that time.

The five-year extension of the federal solar investment tax credit, included in a spending bill in Congress, could have great effects on the solar industry in Hawaii as home owners move to renewable energy. The current federal tax credit, which is scheduled to sunset at the end of 2016, is set at 30 percent. The state tax credit, which has no sunset date, is at 35 percent.

The federal tax credit has effects on residential, commercial and utility-scale solar markets in Hawaii. SunEdison, which has utility-scale solar farms planned for Oahu, is one of the firms that need to use this tax credit to make the projects financially viable and helps create jobs in this growth industry. Because of the tax credit [ending] in 2016, it’s important that these projects move through efficiently and quickly, in time to meet that deadline, build the project and interconnect with Hawaiian Electric’s grid. In the commercial market, it’s turned into a race for businesses to get their systems in place before that tax credit ends in about a year.

Todd Georgopapakas, partner of Honolulu-based Distributed Energy Partners (DEP), said he’s very busy. Homeowners and businesses that haven’t done solar is getting in line. DEP’s backlog is bigger than it has ever been, and it expected to only increase as they get closer to 2016 when the federal tax credit ends.

In the record-breaking residential market, which already has received a huge blow as state regulators recently ended the net energy metering program, the federal tax credit extension is welcomed news! The proposed federal tax credit extension will keep the credit at 30 percent through 2019, with a drop to 26 percent in 2020, another drop to 22 percent in 2021 and then to 10 percent in 2022.

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A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option  to “Create A Printable PDF of the Presentation”.

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National Unemployment Rates at 5.0 Percent

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After a stronger-than-expected October Non-Farm Payrolls report, mortgage-backed securities sold off worldwide on Friday, creating a substantial hike in mortgage rates.

Some portals that offered online quotes for home buyers showed conventional 30-year fixed-rate mortgage rates had crossed 4.00 percent for the first time in 15 weeks, and the 15-year fixed-rate rates were approaching 3.25 percent. Adjustable rate mortgages were on the rise as well, with the 5-year ARM at its highest point in nearly a half-year.

Mortgage rates can change quickly! Last week, mortgage rates reached new lows, boosting the purchasing power of home buyers across the country.

On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls report. More commonly known as “the jobs report”, Non-Farm Payrolls gives a detailed look at the nation’s workforce. The report includes jobs by sector, average earnings, and the national unemployment rate.

The Non-Farm Payrolls report is among each month’s closely-watched economic releases, because so much of the U.S. economy is tied to jobs. The October Non-Farm Payrolls report showed 271,000 net new jobs created last month and far more than the 180,000 net new jobs economists had forecast. Furthermore, the unemployment rate declined to 5.0 percent.

The report also showed net upwards revisions in the prior two Non-Farm Payrolls releases. August and September data was revised higher by twelve thousand jobs created, overall. The September number of 137,000, which was revised down from 142,000 and August’s number got pushed up from 136,000 to 153,000.

Professional and business services led sector gains with 78,000 new jobs. Administrative and support services added the most of the group with 46,000 jobs. Health care grew by 45,000 workers, retail added 44,000 and restaurants and bars increased by 42,000. Construction also added 31,000 workers, though the mining sector lost 5,000 jobs.

With job growth surging in October and rebounding from a late-summer slowdown that raised concerns about whether global slowness was infecting the U.S. the strong numbers could point to this summer’s labor market pullback as just an anomaly. The report also puts home buyers on notice. October’s jobs data gives the Fed more evidence for its “liftoff” from the zero-interest rate policy to be more likely in December. After the Feds last meeting in October, the Federal Reserve said that an increase in the Fed Funds Rate would be on the table for its December meeting, and twice last week, Fed members said that liftoff is now a “live consideration”.

A broader measure of unemployment that includes those who have stopped looking as well as those working part-time for economic reasons declined to 9.8 percent, the first time it’s been below 10 percent since May 2008. More important was the growth in average hourly earnings, which jumped 9 cents an hour, representing an annualized gain of 2.5 percent. The average workweek remained at 34.5 hours.

The labor force participation rate remained at a historical low of 62.4 percent, though the decline in the total labor force slowed a bit. There were 97,000 fewer Americans counted as not in the labor force, a number that remains near record highs at 94.5 million.

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Homes for Sale REO Short Sales FNMA HomePath Properties HUD Homes USDA Homes Non-Warrantable FNMA FHLMC FHA VA USDA Approved Condominiums Co-Ops Town Homes Manufactured Homes Modular Homes Mobile Homes Log Homes Second Homes Investment Property 2-4 Family Custom Home Builders Custom Built Homes Luxury Homes Real Estate Brokers & Agents Down Payment Assistance

A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option  to “Create A Printable PDF of the Presentation”.

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What Home Buyers Need to Know for the Week of Nov 2th, 2015

Stephens Short Banner

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Last week’s economic reports indicated a mix of economic news. Standard & Poor’s released its Case-Shiller 20 City Home Price Index showing that August home prices rose, but the often revised New Home Sales showed a disturbing drop in September, especially in the northeast. The FOMC Minutes were also released, but little clues were provided as to when the Fed would raise the overnight federal funds rate, which has an effect on consumer and mortgage loans.

In August we saw 18 or the 20 cities Standard & Poor’s tracks with its Case-Shiller report showing the average home price rose, with Denver, Colorado and San Francisco, California posting year-over-year double digit increases of 10.70 percent. Portland, Oregon closely followed with a year-over-year gain of 9.40 percent. All of which makes these cities un-affordable to most home buyers. On the opposite spectrum were cities like Chicago, Illinois and Washington, D.C. where year-over-year gains came in only at 1.90 percent and New York City with a year-over-year gain of just 1.80 percent.

The Commerce Department said last week that new-home sales slumped 11.5 percent in September to a seasonally adjusted annual rate of 468,000, the lowest level since November of 2014 and September’s drop ended a two-month streak of accelerating sales. Higher home prices were seen by analysts as contributing to a lag in New Home Sales in September. On average, home buyers can purchase a previously owned home at around 35 percent less than a comparable new home. The slowdown has yet to hit sales of existing homes as drastically, but the September pullback in newly built properties was severe. Purchases of new homes dropped in the Midwest, South and West, but plummeted a stiff 61.8 percent in the Northeast!

The Commerce Department reported late last week that pending home sales dropped -2.30 percent as compared to August’s reading of -1.40 percent. Fewer home sales in September are consistent with spring and summer being peak buying season. However, I included several links in the New Homes Sales blog post last week pointing to real concerns about cooling economic trends, as factors that are likely to contribute to slower than normal home sales in the coming months.

The Federal Reserve hinted in its release of the most recent FOMC minutes that we could see a December rate hike. Say what they will about an improving economy that merits a rate increase to line the pockets with the 1 percent, the only people seeing an improving economy are those who don’t live on Main Street, but reside on Wall Street. 

Many economists have been trying to predict when the Federal Reserve will raise its overnight federal funds rate, which is currently set at 0.00 to 0.25 percent. The Federal Open Market Committee of the Fed indicated in its post-meeting statement that rates could be raised in December, when the committee meets for the final time in 2015. Early in the year, many officials thought the Fed would raise rates by June, but a first-quarter economic slowdown stayed their hands. This summer a number of officials pointed to September, but expectations in financial markets for a move by then declined in August, as the economic outlook shifted. Stock prices fell, the dollar rose and yields on risky bonds increased amid uncertainties about China’s economy and other emerging markets. If you read our blog post on New Home Sales, you’ll see things haven’t gotten any better around the world, if not worse and a rate increase is the last thing we need right now. When the Fed does raise rates, mortgage rates and other consumer lending rates can be expected to increase as well.

October Consumer Sentiment decreased to a reading of 97.6 as compared to an expected reading of 101.6 and September’s reading of 102.6, suggesting consumers are increasingly wary of economic conditions as well as potentially higher interest rates.

pmms_chart (4)

Freddie Mac reported that the average rate for a 30-year fixed rate mortgage fell by three basis points to 3.76 percent. Discount points were unchanged at an average of 0.60 percent. The average rate for a 15-year fixed rate mortgage was unchanged at 2.98 percent. The average rate for a 5/1 adjustable rate mortgage was also unchanged at 2.89 percent. Average discount points were 0.60 for fixed rate mortgages and 0.40 percent for a 5/1 adjustable rate mortgage.

Jobless claims were slightly higher with a reading of 260,000 new claims filed against expectations of 265,000 new claims and last week’s reading of 259,000 new claims filed.

What’s Ahead for the Week?

We’ll get reports on Construction Spending, ADP Payrolls, the Non-Farm Payrolls report and the National Unemployment report, along with our weekly reports from Freddie Mac on mortgage interest rates and new jobless claims.

Livingston-Homes-for-Sale

Homes for Sale REO Short Sales FNMA HomePath Properties HUD Homes USDA Homes Non-Warrantable FNMA FHLMC FHA VA USDA Approved Condominiums Co-Ops Town Homes Manufactured Homes Modular Homes Mobile Homes Log Homes Second Homes Investment Property 2-4 Family Custom Home Builders Custom Built Homes Luxury Homes Real Estate Brokers & Agents Down Payment Assistance

A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option  to “Create A Printable PDF of the Presentation”.

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