Loan Pre-Approval and Turning Yourself Into a “Cash Buyer

Being pre-approved for a loan puts you in a great position when buying a home. It puts you on equal footing with an all-cash buyer, in essence turning yourself into a cash buyer.

With a real pre-approval, the buyer is the next-best-thing to being a “cash buyer” because the seller can rest assured that the buyer will qualify for a loan.

A truly “all-cash buyer” does not have to worry about lender approvals, but will typically still be concerned with a property appraisal and an acceptable title report.

Being pre-approved for a loan puts a buyer in a better position with the seller of the property. It allows the buyer to understand the costs associated with the purchase as well as the monthly costs associated with the ongoing ownership.

The Pre-Approval Process
The pre-approval process simply means that a buyer is getting approved for a loan prior to reaching an agreement with a seller of a property. The buyer will provide the lender with current income, asset and credit documents and the lender will determine the loan amount for which the buyer will be able to borrower.

The pre-approval process can take anywhere from 2 – 30 days, depending on the variables surrounding the possible transaction (credit worthiness, location of assets, calculation of income, etc).

Once a loan amount and purchase price have been determined by the lender, the final approval will usually be subject to an acceptable purchase contract, property appraisal, title report and final interest rates.
While it will vary from borrower to borrower based in the individual characteristics, a lender will typically be able to pre-approve a buyer within 5 days of receiving all of the applicable income, asset and credit documents

This Week’s Market Commentary

This week brings us the release of four economic reports for the markets to digest, with three of them being considered important.

One of those three is one of the more important reports we see each month.

There is relevant data or events scheduled for each day except Thursday, so it will likely be another active week for mortgage rates.

May’s Personal Income and Outlays data will be posted early this morning. This report gives us an indication of consumer ability to spend and current spending activity. They are important because consumer spending makes up two-thirds of the U.S. economy.

Analysts are expecting to see an increase of 0.3% in income and a 0.1% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

June’s Consumer Confidence Index (CCI) is the second report of the week. It will be posted late Tuesday morning. It is important to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial situations, they are likely more apt to make large purchases in the near future.

Current forecasts are calling for a reading of 60.3, down from last month’s 60.8 reading. The lower the reading, the better the news for bonds and mortgage rates.

Friday has two reports scheduled, with the first coming from the University of Michigan who will update their Index of Consumer Sentiment for May. This index gives us a measurement of consumer willingness to spend.

As with Tuesday’s CCI, if consumers are more comfortable with their own financial situations, they are more apt to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data has the potential to affect bond trading and mortgage rates.

The second report of the day and the last data of the week is the Institute of Supply Management’s (ISM) manufacturing index for June late Friday morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. A reading above 50 means that more surveyed executives felt business improved during the month than those who felt it had worsened.

Analysts are expecting a reading of 51.1. That would indicate that manufacturers felt business worsened from the previous month, when we saw a 53.5 reading. Good news for bonds and mortgage rates would be a weaker than expected reading, particularly something below the recessionary threshold of 50.0.

Overall, tomorrow and Tuesday’s data should bring some volatility in trading and mortgage rates, but Friday’s ISM report is definitely the most important of the week.

How to Decorate Using Feng Shui

Feng shui is an ancient Chinese system of aesthetic arrangement believed to help improve life by receiving positive qi, sometimes spelled chi. In a new home, or when rearranging things in your current home, utilizing feng shui principles in decor is not very difficult.

The video below introduces concepts of arranging furniture using the principles of feng shui.

Tagged as: decor, feng shui, stress reduction

Mortgage Rates Set New 2011 Low

Mortgage rates have continued their decline and have set yet another 2011 low, according to the Wall Street Journal.

A decrease in new jobs has caused the mortgage rates to fall to the lowest point of the year. The decline in fixed rates represented the eighth-straight weekly fall.

This is a result of the statement by the Bureau of Labor Statistics this week that employers did not add nearly as many private-sector jobs as they expected.

Freddie Mac’s most recent survey shed light on the lower rates, and the downward trend is continuing.

This Week’s Market Commentary

This will likely prove to be another active week in terms of mortgage rate movement due to the economic data and other events that are scheduled, but we may see less intra-day swings than we did the past two weeks. There are four economic reports scheduled for release in addition to another Federal Open Market Committee (FOMC) meeting.

There is no relevant economic news scheduled for release tomorrow. Tuesday brings us the first data with the release of May’s Existing Home Sales report. The National Association of Realtors will give us figures on home resales late Tuesday morning. This data helps us measure housing sector strength and mortgage credit demand, but it usually takes a large variance from forecasts for it to cause a noticeable change to mortgage rates. It is expected to show a decline in home sales from April to May.

Wednesday’s only event is the adjournment of the FOMC meeting that began Tuesday. It is widely expected that Mr. Bernanke and company will not change key short-term interest rates at this meeting. But, as we have seen so many times in the past, it is the post meeting statement that often creates the most volatility in the markets. They could give an opinion of the overall economy or inflation, hinting at a possible future move or lack of one. Statements like these could cause a knee-jerk reaction in the markets and possibly mortgage pricing after the 12:30 PM ET adjournment.

Thursday’s only report is the release of May’s New Home Sales. It is similar to Tuesday’s Existing Home Sales report, but tells us how well sales of newly constructed homes were last month. It is also expected to show a decline in sales, but will likely not have much of an impact on mortgage rates because this data tracks only the 15% of home sales that Tuesday’s data does not.

There are two reports being released Friday morning. The first is the final reading to the 1st Quarter Gross Domestic Product (GDP). The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. However, this data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Market participants are looking more towards next month’s release of this quarter’s GDP reading. Last month’s first revision showed a 1.8% rise in the GDP, which is what analysts are expecting to see again.

May’s Durable Goods Orders will also be posted early Friday morning, giving us an indication of manufacturing sector strength. It is known to be quite volatile from month to month and is expected to show an increase of 1.0% in new orders from April to May. A large decline would be the ideal scenario for the bond market and would likely lead to a decline in mortgage pricing because it would indicate manufacturing sector weakness.

Overall, today will likely be the quietest day of the week unless the stock markets stage a rally or sizable sell-off. The most active should be Wednesday with the FOMC meeting adjourning or Friday due to the Durable Goods report being posted that day. Tuesday’s news may also affect mortgage rates, but likely not as much as other days.

This Week’s Market Commentary

This week is pretty busy with seven economic reports scheduled to be released, all of which are being posted over four days.

Three of the seven are considered to be of high importance to the markets and mortgage rates. The remaining ones are of interest to the markets but likely will not cause a large change in mortgage rates unless they vary greatly from forecasts.

There are two reports scheduled for release Wednesday, but one of them is the week’s most important and arguably the single most important report we see each month. That is May’s Consumer Price Index (CPI). It is very similar to Tuesday’s PPI, but measures inflationary pressures at the more important consumer level of the economy. It is expected to show a 0.1% increase in the overall reading and a 0.1% increase in the core data. A larger than expected increase in the core reading would most likely lead to a noticeable upward change to mortgage rates Wednesday, while a weaker core reading could lead to a bond rally and lower mortgage pricing.

The first data of the week comes Tuesday when two of the highly important reports are scheduled. May’s Retail Sales data and Producer Price Index (PPI) will both be released at 8:30 AM ET Tuesday morning. The sales data gives us a very important measure of consumer spending, which is highly relevant to the bond market because consumer spending makes up two-thirds of the U.S. economy. Analysts are expecting to see that retail-level sales fell 0.7% last month. A larger decline in sales would be good news for the bond market and could lead to lower mortgage rates Tuesday.

The second release of the day is one of the week’s two key measurements of inflation. May’s Producer Price Index (PPI) will help us measure inflationary pressures at the producer level of the economy. There are two readings of this index, the overall and the core data. The core data is considered to be the more important one because it excludes more volatile food and energy prices. A large increase could raise concerns about inflation rising as soon as the economy gains some traction. This would not be good news for bond prices or mortgage rates since inflation erodes the value of a bond’s future fixed interest payments. Rising inflation causes investors to sell bonds, driving prices lower, pushing their yields upward and mortgage rates higher. Analysts are expecting to see an increase of 0.1% in the overall index and a 0.2% rise in the core data. It will not take much of a variance from forecasts for the markets to react, which would most likely lead to changes in mortgage rates.

Wednesday’s second relevant report will come mid-morning when May’s Industrial Production data is released. This report will be released at 9:15 AM ET and is considered to be moderately important. It measures output at U.S. factories, mines and utilities, giving us a fairly important measurement of manufacturing sector strength. If it reveals that production is rising, concerns of manufacturing strength may come into play in the bond market. A larger increase then the expected 0.2% would indicate that the manufacturing sector is stronger than thought and would likely help push mortgage rates higher. That is assuming that the CPI doesn’t surprise us.

May’s Housing Starts will be posted early Thursday morning. This data tracks starts of new home projects. It is the week’s least important report and likely will not affect mortgage rates unless its results vary greatly from forecasts. It is expected to show that starts of new homes rose last month, indicating some strength in the housing sector. That is basically bad news for the bond market and mortgage rates because a weak housing sector makes a broader economic recovery less likely. However, this data is not important enough to cause a noticeable change in mortgage rates.

Friday has the remaining two reports, both during late morning hours. June’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment is the first. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 73.5. A smaller than expected reading would be considered good news for bonds because it would mean that surveyed consumers were less optimistic about their own financial situations than thought. That often means they are less likely to make large purchases in the near future, but since this report is only moderately important it likely will not influence mortgage rates considerably.

May’s Leading Economic Indicators (LEI) will close out the week’s data at 10:00 AM Friday. The Conference Board, who is a New York-based business research group, will post this data. It attempts to predict economic activity over the next three to six months. Good news for mortgage rates would be a decline in this index, but it is expected to show a 0.4% increase.

Overall, look for Tuesday or Wednesday to be the biggest day of the week. Not just because it brings the release of four of the week’s seven reports, but also because of the importance of some of those releases. We saw plenty of movement in the markets and mortgage pricing last week and it is quite likely that this week will be similar. The stock markets will also influence bond trading and mortgage rates, so watch the major indexes in addition to the economic reports. The fact that the Dow closed the week below 12,000 will be headline news if it does not bounce back above. It is highly recommended that you maintain contact with your mortgage professional this week if still floating an interest rate.

How to avoid big problems with your do-it-yourself project

On a warm sunny day, you might not want to think about the cold days of fall or the snowy days of winter. But recalling them could revive your wishes for a cozy fireplace or the need for extra heat in the family room.

Summer is a good time to make choices and decisions. Choices include low-cost prefabricated wood-burning units, personally designed masonry fireplaces and high-efficiency gas fireplaces. Your first consideration should be the purpose of the fireplace. One that is for purely aesthetic purposes is different from one that provides needed heat.

Free-standing wood stoves are a popular choice for adding heat, as are fireplace inserts. An insert converts fireplaces into an efficient heat source.

Some homeowners want to buy a fireplace or insert they can install themselves, but household advisor Angie Hicks of Angie’s List recommends hiring a professional.

Professionals will do a site survey to make sure that where they put it meets code requirements and that they can do the chimney or venting on the appliance properly.

They will advise do-it-yourselfers and help them as much as they can, but the homeowner must check with local government to ensure there are no restrictions or heating requirements involved.

With a wood-burning stove, a flue pipe has to go up through the height of the house and out the roof.
With gas, you may not have to do that. Some gas fireplaces can be vented through the wall. Some are unvented, but you have to be sure the square footage of the room is sufficient.

Want Granite Countertops? Prices are Lowest Ever

The price of granite has declined by about 50 percent. You can thank competition for the reduction as producers in Asia and Brazil quarries now market granite in the United States.

Remodeling contractors say the cost of labor for kitchen projects is down as well. People who have waited out the recession and have the money to do it are moving forward with kitchen updates.

The Harvard Joint Center for Housing Studies say remodeling spending fell 16 percent between 2007 and 2010. Now, affordable prices for traditionally upscale appointments are perking up homeowners’ remodeling plans.

According to the National Association of Home builders, overall remodeling costs are running at least 20 percent lower than 2006.

The biggest budget killer: impulse buying.

Studies at the University of Pittsburgh show that impulse buying adds up to 30 percent of overall spending. Here are some tricks to keep you from unplanned purchases:

• Look at the clothing or electronic gadget but don’t touch them. Picking up an expensive sweater or cellphone increases your sense of ownership, which makes it more difficult to resist buying. Consider what you would rather do with the money. Save it toward a grand vacation? Focus on which one you would rather give up.

• Shop with a list. This classic idea can be one of the biggest money savers of all. Decide what you want and need. Mentally decide how much you are willing to spend on gifts, personal care and items for your home, and how you could save one-third of those costs over a year.

• Create separate savings accounts for items like vacations, Christmas, and new furniture. One Dartmouth researcher says a reminder on your calendar can help. Reminders like “Deposit tax refund to Roth IRA” can boost savings by 15 percent.

Tagged as: budget, decor, real estate, remodeling, saving money