weekly mortgage update from Mickey 9/25/07

Here is the weekly update from Mickey regarding the interest rates on a home mortgage:

Mortgage interest rates have become very stable over the last few days. Currently, borrowers can obtain 30 year fixed rate financing for rates ranging from 6.375% to 6.875% without origination fees or discount points. Individual borrower rates will depend upon creditworthiness and loan size.

Continuing weekly update from Mickey

As Mickey promised, here is the update on the mortgage rates this week:

Earlier this week, I promised an update on mortgage rates after the news of the Fed's half point short-term rate reduction had time to work its way into the financial markets. As feared, anyone expecting immediately lower long-term interest rates has to be disappointed. Long-term credit markets have worsened somewhat and are worsening further as this message is being typed. Today's early rate sheets indicated 30 yr fixed rate conforming loans in a range of 6.375% to 7.00% without discount points. As always, specific borrowers would be treated in accordance with loan size and their individual credit worthiness. At the moment, we are seeing a series of inter day repricing from our investors. It appears that the lower end of the above-stated range will move to 6.5%.

There is a growing likelihood that Fannie Mae and Freddie Mac will soon increase the current "conforming loan limit" to some yet-to-be-determined amount above the present $417,000. Best bet is for something in the neighborhood of a 10% increase (as reported in today's Wall Street Journal). This would put the new limit around $460K. This would allow some relief to "jumbo" borrowers.

weekly interest rate comment from Mickey 9/18

Mickey Carlton's comments today about the interest rates this week:

Mortgage interest rates have waited quietly for the Federal Reserve to announce their latest "interest rate" decision. Thirty-year mortgage money was offered at 6.375% to 6.875% prior to the release of the Fed's report. Individual loan rates depend upon loan size and the creditworthiness of the borrower.

The Federal Reserve lowered both the Fed Funds rate and the Discount Rate by .5%. This will have an immediate and positive effect on consumer short-term borrowing. Home equity loans and credit card rates will drop right away. However, we should not be overly convinced that long-term rates will fall as quickly.

The Fed Funds rate is the rate used by banks to borrow from each other in the overnight market. The Discount Rate can be used by banks to borrow directly from the Federal Reserve in the overnight market. These 24 hour rates are the only rates the Fed controls, directly. The mortgage rates that we live on are set by market factors. Long-term lenders sometimes react to a rate cut by charging higher rates on long-term money. Their concern is that the Fed's rate cuts will allow inflation to re-enter the market. Inflation, of course, is the great enemy of long-term lending. I will issue an update to this report in a day or two. Today's market closed before a full reaction could be measured.

More bad news for Florida homeowners

RealtyTrac reports today that the number of foreclosure filings in August jumped 36% since July in the US. That is more than double from the same time last year.

Florida was one of 3 states that had the highest foreclosure rates, according to their research. Our foreclosure filings were up 77% from July's total. We had 33,932 foreclosure filings! For us, that means that we had one foreclosure filing for every 243 households.

This research confirms what Realtors have been forecasting for weeks. Unfortunately, we are continuing to see the fallout from sub-prime loans. Also, the number of homes for sale are increasing at an alarming rate, meaning that we have over 18 months of inventory in the Orlando area (6 months of inventory gives us an equal buyer/seller market).

As I look at properties for sale in the newspaper, I can immediately tell you which properties are overpriced---be careful about choosing a Realtor in this market who is telling you about the price you want to hear when listing your property. If you have to sell, choose a real estate consultant that is going to tell you the truth. Going with the person who will list your house for the most money may result in your property sitting for over a year on the market. Hire someone that will explain that you have to stay ahead of the curve.

Unfortunately, this trend is only getting worse, not better. When will we hit the bottom? We won't know that until that time has passed......

Remodeling or home staging?

Thinking of remodeling the kitchen before you put your house on the market? My advice would be to renovate for your own enjoyment----don't expect to get the value of your renovation out of the sale....especially in this market!

Real Simple magazine says that the average price to renovate a kitchen in the US is about $43,860.

Today, granite counter tops and tile floors are becoming the standard. Builders are including them in new properties being built every day. You may not see a higher return for all the costs and hard work. Although you will recoup about 90% of your remodeling based on national averages, be sure to consult a Realtor if you think about renovating to only sell your home. Every area and every market varies, and other smaller steps may be effective.

I've seen a seller put in new carpet, and the new buyers rip it out the first day they move in and put in new tile floors. Renovation is not your only option. Realize that you can lower the cost, or consider a reduction during the negotiations with an interested potential buyer.

One inexpensive way to improve your house is to consider home staging options. Find a Realtor who knows about home staging and hire them to sell your home. I have helped some of my clients in the past. If you are interested in staging your home for selling, call me.

Moving on up.....

Since houses are such a great deal right now, does it make sense to "upgrade"? The National Association of Realtors suggests that you answer these questions:

1. How much equity do you have in your home? Although you can get a home for a good price, that means you have to sell yours for a good price, too. To make a profit on your current home, it is best to have equity in your home to justify selling it.

2. Has your income increased? A bigger paycheck is needed to cover the bigger house payment, closing costs, and moving expenses.

3. Does your neighborhood still meet your needs? With young children you need to consider the schools they will be attending in a few years.

4. Can you add on or remodel? Your yard has to be big enough, and you may not want the headaches of remodeling.

5. How are the interest rates? Make sure your payment will not increase significantly.

Reprinted from REALTOR Magazine Online, 2005.

Blame it on MTV

You sit back, watching Cribs on MTV, and start dreaming of your own mansion. When designing your place, consider how you entertain and what hobbies you enjoy.

Here are some of the latest ideas to customize your own home:

Your own home theatre: Have a mini-theatre placed in your house. At the Street of Dreams, I saw a mansion with a pirate-themed room---it looked like the inside of a boat. It may become dated in a few years, but a traditional style could work for quite a while. Don't forget the popcorn!

A home spa: Save all that money you spend traveling to an exclusive spa, and build your own! Include a giant shower, steam room, and aromatherapy. Masseuse not included.

A designer back yard: Besides a pool and deck, people are adding much more. Consider a backyard kitchen, a waterfall, a fountain, and lush landscaping. Or, combine the theatre idea and put in an outdoor theatre.

Extensive gardens: Instead of traveling to England or Versailles, create your own garden in your back yard. A landscape architect can design your dream.

Who knows...maybe you'll have your own episode one day....

Questions to ask a home inspector

When hiring someone to inspect your home, make sure you ask:

1. What are your qualifications?

2. How many inspections do you conduct each year?

3. What does your inspection include?

4. Do you have past clients I can contact?

5. How long will the inspection take? Can I attend? (if you want to!)

6. How much does the inspection cost?

Tax information for new home owners

Are you a new home owner, and concerned how this is going to affect your taxes? The IRS has created an on-line publication called "Tax Information for First-Time Homeowners." Look for Publication 530.

Check it out: http://www.irs.gov/

Some things to consider when purchasing.....

It's easy to call a "for sale" sign posted in the yard and ask the price....but that is not the only number you should consider...

1. What are the taxes on the home? Most likely they will go up when you purchase the house.

2. What are the utility costs? Have you figured them into your future budget?

3. How old is the roof and the appliances? You may have to repair or replace them, sooner than you expected if they are old.....

4. What was the price of the comparable sold properties in the neighborhood?

5. What is the home insurance payment going to look like?

These are just some of the questions to ask when making a purchase.....let a realtor give you the special treatment, and get these answers, and many more, for you!

Repair or replace?

One day you are standing in the kitchen, and you realize you cannot get the dishwasher to run. Kicking does not seem to be working, so you have to make a decision. Do you get the dishwasher repaired, or do you purchase a new one?

Consider replacing the following appliances after:

6 years: dishwasher, over-the-range microwave, and top freezer refrigerators.

7 years: dryer and top-loading washing machines.

8 years: Bottom freezer refrigerator, side-by-side refrigerator, electric or gas range, front-load washing machines.

The decision is based on the cost of repair, versus purchasing a new one, as published by Consumer Reports, May 2007.

You have got to be kidding me....

Today I was listening to the radio, and there was a commercial talking about a couple purchasing a home. It was a re-enactment of a true story, and it went something like this:

They had bought their first home, were planning to close on a Monday, marry on the next Saturday, and move in after their honeymoon. So far, so good......then the problems started....After their mortgage broker had their loan package for 45 days, he called on a Friday to say they could not close on the following Monday. He called his fiancee, and she told him to call a real estate attorney. After the call, the problem was resolved by the lawyer, and they closed on Monday.

The commercial then encouraged listeners to call a real estate attorney when purchasing a home. ........Wait a second.........

1. The mortgage broker had the loan package for 45 DAYS and couldn't close on the scheduled date?!?! A seasoned real estate agent can work with reputable, experienced mortgage brokers and can close a transaction in mere days----some as quickly as 48 hours.

2. Where was the real estate agent?!?! Why hire a lawyer and pay a lot of money (remember, lawyers cost at least $200+ an hour)? A Realtor can insure that the mortgage will be ready for closing, and as a buyer's agent, does not require the buyers to pay a dime!

3. Also, the lawyer was called once there was a problem....where was the experienced person who can help you find a good deal, negotiate an incredible price, and can take you through all the necessary steps to buy a house....was an inspection done? Does the house have termites? Mold? A good real estate agent is experienced to handle all kinds of problems, and has the contacts to insure they are handled properly.

Now, I am a lawyer and can appreciate the need for legal representation. A real estate attorney is on retainer by our brokerage----we do not practice law. However, why pay legal fees when you can get greater service for no cost?

Weekly interest rate comment from Mickey

Mickey Carlton's weekly comment about the mortgage market, for the week of September 3, 2007:

Mortgage interest rates dropped slightly over the last several days. Jumbo rates, in particular, showed a reversal of their recent uptrend. Conforming (below $417,000) rates on thirty year fixed loans can be expected to range from 6.5% to 6.875% depending upon loan size and the individual borrower's creditworthiness.