We had a really fun guest this week – Tim Kelly from Green Goods. On Friday we had a bit of a Mortgage Matters outing to check out their showroom on 111 South Street in San Luis Obispo, and we found ourselves making excuses to start home renovations so that we could use some of their great products. Click “more” to see some of the photos from the trip (including a fuzzy rug made entirely from recycled plastic bottles!). Read more
Durable Goods Orders, a measure of the new orders placed with domestic manufacturers, fell lower than expected in January. After a revised 3.2 percent jump in December and a 4.2 percent increase in November, January orders declined 4.0 percent. According to Bloomberg News, the indicator is one of the most volatile monthly series of U.S. major indicators, and that overall, the picture for manufacturing looks good.
Home prices cell in December according to the S&P Case-Shiller Home Price Index. The prices in the 20-city index fell 4 percent in December to finish 1.1 percent lower for 2011 overall. Atlanta and Las Vegas had the steepest price declines.
Consumer Confidence increased nine points to 70.8 percent. For some context, the reading was at 40.9 in October 2011. The increase in confidence can be reflected by the positive jobs reports we have seen of late.
Lending ain’t easy. Lately, we have seen tightened lending standards and an increasingly rigorous loan process. In our quest to make every transaction as quick and painless as possible, we decided to address these difficulties as part of an ongoing series called “Lending a Hand.” This series will prime you the challenges you might encounter during the loan process. Today’s article: Rate Locks.
Since the last time we checked in with a rate update (February 17), rate costs have improved by a half point for the 30-year fixed and nearly a point (!) for the 15-year fixed. This improvement matches the lowest rates we have seen this year and suggests you should call your loan officer to possibly lock in that rate. Click “more” to see rate movements.
An average rate sheet will have ten or so rates listed on it and next to those rates will be an associated cost or rebate (money the bank is willing to pay for closing cost etc.). In other words, the lower the rate, the higher the cost, and the higher the rate, the lower the cost. A good deal of the recent regulation aimed at the mortgage industry as a whole is meant to specifically make sure that clients are aware of these options.
Which rate you choose, particularly on a refinance that will not require that you come out of pocket with money, should be a mathematical decision based upon the likelihood that you will still own the house and be in the loan at the point where you see financial benefit from the lower monthly interest cost. It is relatively simple to figure out the break even point on each rate and set of closing cost. On a purchase people are often limited by the cash they have on hand. Still the use of those funds is something that everyone should examine closely on every transaction to insure that they are maximizing the use of their money with in their time frames.
For our guest on Mortgage Matters this week, we have SLO Green Goods (Saturday on KVEC 920 at 10 a.m.). This will finish off our “Green Month” of February. From their mission statement – “Green Goods is part of a growing movement to act locally and build responsibly, and is the Central Coast’s only business dealing exclusively in Green building supplies, design consultation and construction services.”
Last week on Mortgage Matters we had owner of Patterson Realty Wes Burk.
The number of workers seeking unemployment benefits remained at the lowest level since March 2008. The reading for the week ending February 17 had 351,000 workers seeking unemployment. The four week average dropped to 359,000, its sixth consecutive drop, and lowest rate since March 2008. The overall number of people receiving unemployment benefits was 7.5 million at the beginning of February.
Existing home sales rose 4.3 percent in January to a 4.570 million annual rate. At the same time, the median home price fell 4.6 percent to $154,700. The overall average home price is $201,200.
The increase in sales has helped bring down home supply, which is 6.1 months. As we have discussed before, the supply in a healthy market is typically between 5 and 6 months. Excess supply puts a downward pressure on home prices, and we will need to clear this excess before prices start to recover.