According to the National Association of Homebuilders/Wells Fargo Homebuilders Market Index for December, builder confidence recovered in with a reading of 58. This surpassed both expectations of 56 and last month’s reading of 54.
Analysts noted that builder confidence has steadied after the government shutdown. December’s reading was the highest in four months. Dave Crowe, NAHB chief economist, said that his organization was expecting a “gradual improvement in the housing recovery” in 2014.
Any reading above 50 indicates that more builders are confident about overall housing market conditions than not.
Builder Confidence – Highest Reading Since 2005
Pent-up demand for housing is driving housing markets in spite of higher mortgage rates. Three components of builder confidence used to calculate the overall reading also rose in December. Builder confidence in current home sales rose to 64 from a reading of 58 in November; this is the highest reading since 2005.
Confidence levels in housing markets over the next six months rose to 62 from last month’s reading of 60. Builder confidence also grew in the area of buyer foot traffic in new developments and gained three points to a reading of 44.
All of this is good news, but the NAHB said that a gap remains between higher home builder confidence and the rate of new home construction. A seasonal lull in home construction is not unusual especially in areas experiencing harsh weather.
More Jobs, Low Refinance Numbers Could Mean More Mortgages Available
MarketWatch analysts suggest that if the economy continues to add jobs “at a brisk pace” and mortgage lenders ease lending requirements next year, the demand for homes could further strengthen the U.S. housing market next year.
Low numbers of refinance mortgages in 2013 may cause some lenders to loosen mortgage credit requirements, which were tightened after the housing bubble burst.
Economic News scheduled for today may provide a broader picture of economic health and likely trends for 2015. The Federal Reserve’s Federal Open Market Committee will provide its expected statement after its meeting, and Fed Chairman Ben Bernanke will give his last press conference as Fed chair as well.
Any indication of plans to reduce the Fed’s current quantitative easing program could upset financial and mortgage markets, but most economic analysts don’t expect an announcement of tapering the Fed’s asset purchases before next year.
Data on November Housing Starts and Building Permits will also offer clues as to how housing markets and the general economy are doing.
Whether you are purchasing a new home or you are considering applying to refinance your home, chances are the lender will require an escrow account. These accounts are often a source of confusion for homeowners.
In reality, these accounts benefit the homeowner and help protect the lender.
What Is An Escrow Account?
Escrow accounts are sometimes called “impound” accounts. These accounts are set up to help manage payments of property taxes and homeowner’s insurance.
Depending on the individual requirements of the lender, you may be asked to pay as much as one-quarter of these upfront and they will be put into the account for the purposes of making payments.
Who Controls Escrow Accounts?
Lenders have complete control over escrow accounts. However, homeowners are entitled to receive an annual statement advising them of their escrow balance.
If there is an increase or decrease in insurance payments through the year, a homeowner may request the lender evaluate the escrow account and change the amount that is paid.
Is Interest Paid On Escrow Accounts?
There is no mandate to pay interest on escrow accounts. When you refinance your home, the funds for your taxes and insurance are calculated into your overall payment.
The portion that is to be used to pay taxes and insurance is placed in escrow. Arizona laws do not require lenders to pay interest on these accounts.
What Happens If I Sell My Home Or Refinance?
When you sell or refinance your home, your escrow account will be credited at closing. The amount may be used to lower your out-of-pocket costs or may be turned over to you as a direct payment.
What Happens If There Is Not Enough/Too Much Money In Escrow?
If your lender has underestimated your escrow payments, they may request you send an additional payment to make up the difference. In the event you are paying too much into escrow, your lender has the discretion to release the overage amount directly to you.
In most cases, shortfalls or overages of $50 or less are typically not a major concern.
If your lender requires you to have an escrow account for the taxes and insurance portion of your mortgage payment, it can be very helpful. Escrow accounts help ensure you do not have to come up with a large payment once a year for insurance or quarterly for taxes.
In some cases, if a lender does not require an escrow account, as a borrower, you may request they escrow your taxes and insurance for convenience.
Mortgage Debt Rises For First Time Since Recession
Last week was relatively quiet concerning scheduled housing-related news, but the Federal Reserve’s financial accounts report, released on Monday, indicated that mortgage debt in the U.S. had increased for the first time since the first quarter (Q1) of 2008.
Mortgage debt increased by a seasonally-adjusted annual rate of $87.4 billion, or 0.90 percent. Mortgage debt remains approximately 12.00 percent below pre-recession levels.
Increasing debt is not often considered good news, but in the case of mortgage debt in today’s economy, it suggests economic recovery in the form of higher home prices and fewer foreclosures.
Another instance of counter-intuitive economic results was released Tuesday. The Bureau of Labor Statistics (BLS) released its Job Openings and Labor Turnover Survey (JOLTS) report for October.
JOLTS indicated that 2.39 million workers quit their jobs in October. This was the highest number of jobs quit since 2008. While this may appear counter-productive to a growing economy, it indicates that workers are leaving their jobs for better positions.
Mortgage Rates Fall, Federal Budget Deficit Shrinks
On Wednesday the U.S. Treasury announced that November’s federal budget deficit had shrunk to -$135 billion from November 2012′s deficit reading of -$172 billion. This represents a year-over-year deficit decrease of 21 percent.
Freddie Mac’s Primary Mortgage Market Survey (PMMS) report provided good news as average mortgage rates fell last week. The average rate for a 30-year fixed rate mortgage fell from 4.46 percent to 4.42 percent. Discount points rose from the previous week’s reading of 0.50 percent to 0.70 percent.
15-year fixed rate mortgage rates fell from 3.47 percent to an average reading of 3.43 percent, with discount points rising from the prior week’s reading of 0.40 percent to 0.70 percent.
The average rate for a 5/1 adjustable rate mortgage dropped from 2.99 percent to 2.94 percent with discount points unchanged at 0.40 percent.
Lower mortgage rates are good news for home buyers facing higher home prices.
Weekly jobless claims rose last week. The previous week’s reading of 300,000 new jobless claims was short-lived as the reading for new jobless claims rose to 368,000 last week and surpassed a consensus of 335,000 new jobless claims.
Financial analysts cautioned that employment data can be volatile during the holidays, and noted that the four-week average of new unemployment claims rose by 6000 to 328,750.
What‘s Coming Up
There are several significant releases set for housing-related news. The NAHB housing market index, Housing Starts, and Building permits indicate how current builder confidence and new construction may impact the supply of available homes.
On Wednesday, the FOMC will issue its usual statement at the conclusion of its two-day meeting. Some analysts expect an announcement concerning the Fed’s quantitative easing policy; Outgoing Fed Chair Ben Bernanke is set to give a press conference after the FOMC statement.
In addition to the weekly jobless claims report and Freddie Mac’s PMMS, Reports on Existing Home Sales and Leading Economic Indicators will also be released.
It’s that time of year again when the weather outside gets frightful but the holiday cheer is delightful. You’ve probably got a lot on your mind during these busy winter months, but make sure that you don’t neglect the roof of your home.
Taking care of your roof is an important part of home maintenance and you don’t want to suffer a leak or any other problem during the cold months.
So how can you make sure that Santa and his sleigh have a solid and well-maintained landing pad when they touch down at your house this year? Here are some tips that every homeowner should know:
Check Out Your Gutters
Your gutters are an important part of your roof, because they allow water to flow away from the roof surface before it causes rot and damage. During the winter, your gutters will be more likely to get clogged with fallen leaves, snow and ice and can get blocked if they are not cleared out.
Get yourself a ladder and a friend to hold it for you and clean any leaves, debris and dirt from the gutters. Flush the gutters out with a hose afterward to ensure they are clean. If your gutters have become damaged or leaky, you can use gutter sealant or fibreglass resin to patch up the hole.
Trim Back The Trees
If you have a lot of trees and vegetation overhanging above your roof, it’s a good idea to trim it back before the winter months. At the moment, it might not be touching your roof – but once it is weighted down with snow or blown around by the wind it might do some damage.
When hiring a tree trimming service, get a few different quotes from a range of contractors so that you can be sure that you are getting the right price.
Inspect Your Roof For Weak Spots
A roof inspection can save you from a lot of roof damage, which could get even more serious when the weather gets colder and wetter. Start by performing a visual inspection of the inside and outside of your roof.
Look around for any missing tiles and make sure that the gutters are allowing the water to drain freely from the roof. This can be done while walking around your property with binoculars.
If you spot something that looks suspicious, you can hire a professional roofer to take a closer look. They will be experienced and will know what to look for, so that they can find the weak spot and fit it right away. A roof inspection will cost you, but it is a lot cheaper than paying for a new roof!
These are just a few important maintenance tasks that you can perform in order to ensure that your roof is in tip top shape to welcome the winter season – and a sleigh pulled by eight tiny reindeer! For more handy tips and info about your home, contact your trusted mortgage professional today.
Interest rates fluctuate frequently, often depending on the news. If you are considering refinancing your home, your loan officer may suggest locking in the interest rate on your loan.
There are some valid reasons why this is a good idea including:
Saving Money For The Long-term
Over the life of a loan, an increase of as little as one-quarter of a percent can cost thousands of extra dollars. Spending a small amount of money now to lock in a rate can save money over the life of the loan.
Your loan officer will explain the difference in rate increases initially, over a year and over the life of the loan.
You May Not Qualify At Higher Rates
Whether you are considering refinancing your property or you are buying a new home, you may discover your rate just qualified for your loan to meet the required debt-to-income ratios. An interest rate increase may mean you will not qualify for the loan.
Closing Times May Impact Their Decision
If a loan is scheduled to close within 30 days, it may be a good idea to consider locking in the interest rate your loan officer is offering. The lock will help protect against potential increases in rates during that period of time. This will help you plan your final closing costs and ensure your monthly payments will not be higher that estimated.
Don’t Forget: Upcoming News Impacting Rates
There are often issues that will have a serious impact on interest rates. For example, the current Quantitative Easing program by the Fed is keeping rates low. Should the Fed reveal they intend to modify or taper their program; chances are fairly good that rates will take a slight hike.
Loan officers can help you unwind the news and make sure your refinance is not negatively impacted by interest rate increases.
Not every refinance customer will want or need to lock in their interest rates. However, once a loan has been approved, you should consider talking with your loan officer about the potential of locking in. The small fee that may be required could save you thousands of dollars over the life of your loan.