Archive for March, 2009
More Signs Of A Bottom :In Knoxville Home Sales
March 30th, 2009 categories: Buyers, Market Trends, Sellers
Knoxville Home Sales are we near the bottom?
We are starting to see movement in Knoxville Real Estate Market. First time buyers are out there buying homes right now. Which is good for the Knoxville Real Estate Market and will have a trickle up effect for home sellers.
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FHA Cash Out Refinances Getting More Strict As Of April 1, 2009
March 27th, 2009 categories: Buyers, General, Market Trends, Sellers
If you’re in want of a cash out refinance, the most liberal cash-out program in town is about to make qualification more difficult.
Effective April 1, 2009, the FHA is reducing the maximum loan-to-value on cash-out refinances by 10 percent, dropping the loan size limit from 95% of the home’s value to 85%.
In its official press release, the FHA days it’s making the change to “limit its exposure to undue risk”.
It also lists the following cash-out requirements:
- With less than 12 months since the purchase date, a home’s value cannot exceed its original purchase price — even if home improvements were made.
- A homeowner must be current on his mortgage payments to qualify
- A second, verifying appraisal may be necessary, depending on loan traits
- Co-signers may not be added to the mortgage note in order to qualify
The last day to register a FHA 95% cash out refinance is Tuesday, March 31, 2009. The loan does not need to be “locked” — only registered.
So, if you know that a 95% cash out FHA refinance is in your future, talk to your loan officer before Wednesday morning about registration.
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New Homes in Knoxville
March 27th, 2009 categories: Buyers, General, Market Trends
Looking for a New Home in Knoxville with 3.99% fixed rate mortgage?
Well here is your chance ……… Read the rest of this entry »
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Watch Out For Mortgage Rates When Gas Prices Rise
March 25th, 2009 categories: General, Market Trends
Don’t look now but oil prices are climbing.
This should worry today’s home buyers and would-be refinancers because some of the same forces that helped to push crude past $50 for the first time in 4 months also cause mortgage rates to rise.
March 18, the Federal Reserve committed an additional $1.15 trillion to support the economy.
Since the announcement, investors have questioned whether the Fed is purposefully spurring inflation. The Fed’s total debt purchases now total $1.75 trillion.
And to finance its purchases, the Federal Reserve is printing new money, devaluing the U.S. dollar along the way. This then leads to inflation which, all things equal, causes oil prices to rise, gas prices to rise, and mortgage rates to go with them.
As we’ve seen the last few summers, oil prices and mortgages seem to touch their yearly high points while the weather is warmest.
(Image courtesy: The Wall Street Journal)
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Monthly Home Sales Rise 230,000 In February 2009
March 24th, 2009 categories: Buyers, General, Market Trends, Sellers
Each month, the National Association of REALTORS
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The 9-Step Spring Cleaning Checklist For Knoxville Home Sellers
March 23rd, 2009 categories: General, Market Trends, Sellers
Before You Put Your Knoxville Home For Sale…..
There are a few things to do to get your home ready to compete with all the Knoxville homes for sale.
With the official start of Spring last week comes the official start of Spring Cleaning Season nationwide.
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History As A Teacher: What To Do When Mortgage Rates Plummet
March 20th, 2009 categories: Buyers, General, Market Trends, Sellers
For the fifth time in a year, rate shoppers learned an important lesson this week: When mortgage rates plummet unexpectedly, they often recover just as fast.
Wednesday, the Federal Reserve’s newest $750 billion mortgage market pledge helped to push conforming mortgage rates near their lowest levels since WWII.
24 hours later, however, those rates were expired.
After considering the long-term implications of the Federal Reserve — literally — printing new money to service the recession, markets grew fearful that the Fed’s interventions will eventually lead to inflation. Inflation, of course, is the enemy of mortgage rates.
So, if you’re looking for the explanation of why rates rose as suddenly Thursday as they fell the day prior, this is it. And, in hindsight, rate shoppers might have seen it coming, if only because we’ve seen the exact pattern 4 other times:
- After the Fed’s “surprise” rate cut in January 2008
- After the Fannie Mae and Freddie Mac takeovers in September 2008
- After the Fed announced its first $500 in support in November 2008
- After the Fed zeroed out the Fed Funds Rate in December 2008
Sharp drops in mortgage rate, it seems, are followed by immediate bounce-backs.
Unfortunately, not every would-be refinancing homeowner saw the increase coming. People that locked Wednesday captured the lowest rates in 6 decades. Everyone else wishes they had.
From day-to-day, we don’t know if mortgage rates will rise or fall. Nobody knows that. But, we do know that mortgage rates tend to follow patterns and we’ve seen the above pattern 5 times now.
When mortgage rates plunge like they did Wednesday, they rarely low for long. When you find a rate you like, get in and get locked as soon as possible. By tomorrow, it’s likely to be gone.
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Explaining What The Federal Reserve Did In Plain English (March 18, 2009 Edition)
March 18th, 2009 categories: General, Market Trends
The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today, within the target range of 0.000-0.250 percent. This doesn’t mean the Fed stood pat, however.
On plan to resurrect the economy using “all available tools”, today, the Fed announced a new, $1.5 trillion round of fiscal support for the treasury and mortgage markets.
The stimulus will likely be Thursday morning’s headline story.
In its press release, the FOMC touched upon a few of the prevailing economic issues, using these points as a legitimizing backdrop for its newest debt load:
- Job losses and wealth loss are dragging down consumer spending
- Some U.S. trading partners are falling into recession
- Businesses are cutting back on investment and inventory
Of interest is that the FOMC said today’s inflation levels may be too low to support economic growth at all. This condition is more commonly called deflation. The Fed’s latest actions, therefore, may be a deliberate attempt to induce inflation through unprecedented borrowing.
For home buyers and potential refinancers, this is terrific news — at least in the short-term. By introducing new demand for mortgage bonds, the Fed will help pressure mortgage rates lower. Already this afternoon, mortgage rates fell and they will continue to fall until the market reaches a new equlibrium.
After the Fed’s last intervention, markets reached their balance point in about a day-and-a-half.
Source
Parsing the Fed Statement
The Wall Street Journal Online
March 18, 2009
http://online.wsj.com/public/resources/documents/info-fedparse0903.html
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Today’s Signal That Home Prices May Have Already Bottomed: Building Permits
March 18th, 2009 categories: Buyers, General, Market Trends, Sellers
There’s a mixed message in February’s Housing Starts data and it may be a good sign for home sellers in the near-term.
As reported by the government, new home construction rose by 22 percent last month. The press is running with the headline number, calling it evidence of a market bottom.
A more thorough inspection, however, reveals a different story.
The 22 percent figure applies to all homes built — including apartment building units. Isolating residential units, February’s housing starts rose by just 1 percent. Furthermore, the data’s margin of error is 11 percent.
Statistically, we can’t know if residential housing starts really rose last month, or if it fell instead. What we do know, though, is that the number of building permit requests rose.
Permits to build single-family homes were up 11 percent in February nationwide.
To home sellers, the rise in building permits may confirm that a housing market turnaround is already underway. Builders wouldn’t be putting new inventory on the market, after all, without being sure of their ability to sell it 9 months hence.
The headline figure of 22 percent is attractive, but it’s not completely honest. It’s not the number of housing starts that matter so much right now as the number of housing permits. A rise in permits signals that homebuilders — a group that’s lost a lot of money in the last 2 years — think the worst of housing is already over.
(Image courtesy: The Wall Street Journal Online)
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The Federal Reserve Is Meeting And What It Means To Your Mortgage Rate
March 17th, 2009 categories: Buyers, General, Market Trends, Sellers
The Federal Open Market Committee begins a scheduled, 2-day meeting today to discuss the country’s monetary policy. As is custom, the group will issue a press release to the markets upon adjournment.
There are 8 scheduled FOMC get-togethers annually and the post-meeting press releases are among the most powerful market-moving events of the year.
It’s not the Fed’s actual policy changes that causes fortunes to be won or lost, though.
These changes can predicted and traded — and, therefore, hedged — on Wall Street using Fed Funds Rate Futures. For example, Wall Street predicts with 97% certainty that the Federal Reserve will not make a policy change at this time.
As opposed to than policy change, it’s the verbiage of the FOMC’s press release that can really move markets. This is because the press release is a clear-eyed look into what the Federal Reserve thinks of the United States economy — its strengths, its weaknesses, and its threats.
After its January 2009 meeting, the FOMC’s press release said:
- The economy has weakened further
- Employment has declined steeply
- A gradual recovery may come later in 2009
Since that meeting, though, a number of high-profile economists, including Fed Chairman Ben Bernanke, have said the likelihood of economic recovery increased for late-2009.
This is why tomorrow’s FOMC press release is so important. It will contain clues about the Federal Reserve’s next steps and current psyche. Undoubtedly, it will make a significant impact on the mortgage markets.
In general, when the Fed alludes to inflation and stronger growth, mortgage rates rise. Talk of a recovering economy and rising oil prices in tomorrow’s press release, therefore, would likely raise rates from their current low levels towards levels not seen for 6 months.
In the end, it’s what the Fed says that matters more than what the Fed does. The FOMC is expected to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.
(Image courtesy: Wall Street Journal)
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