Skip to content

Hello world!

Welcome to WordPress.com! This is your very first post. Click the Edit link to modify or delete it, or start a new post. If you like, use this post to tell readers why you started this blog and what you plan to do with it.

Happy blogging!

Before Moving, Check Your New Cost Of Living Estimates

Cost of Living adjustments in a new townWith home values slow to rise and mortgage rates at all-time lows, there’s never been a more affordable time to own a home.

However, there is more to the cost of living than just a mortgage payment. There’s the cost of groceries, gasoline and routine medical care, too.

Not surprisingly, where we live affects our costs.

Big cities are often more expensive in which to live, for example, and local tax laws influence daily costs, too. 

For home buyers moving across state borders, therefore — or even for those moving long distances intra-state — it’s important to know the relative costs in your new hometown as compared to your current one. Your household cash flow depends on it. You can’t know your budget for a home if you don’t know what life in a new town will cost you.

Enter Bankrate.com’s Cost of Living Comparison Calculator.

In comparing the costs of 60 mundane, everyday items, the Cost of Living Comparison calculator can show you how common costs in your current home town compare to costs in your soon-to-be new home town.

The calculator asks for just three inputs — (1) In what city do you live now, (2) To what city are you moving, and (3) What is your current salary — then uses that information to produce a detailed cost comparison.

Some of the Cost of Living items compared include :

  • Ground beef costs
  • Veterinary services costs
  • Dozen egg costs
  • Doctor visit costs
  • Hair care costs

The calculator also includes local mortgage rate differences to help plan for housing, and accounts for median home prices, too.

The online Cost of Living calculator is based on data from the ACCRA. On the ACCRA website, a similar cost comparison report sells for $5. At Bankrate.com, you can get the data for free.

Mortgage Payments Fall To All-Time Lows

Mortgage payments

It’s a money-saving time to be a Tempe home buyer. Historically, mortgage rates of all types — conventional, FHA, VA and USDA — have never been lower and low mortgage rates make for low monthly payments. 

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage fell to 3.67% nationwide last week for borrowers willing to pay 0.7 discount points at closing, plus a full set of closing costs. 0.7 discount points is a one-time closing cost equal to 0.7 percent of your loan size, or $700 per $100,000 borrowed.

Today’s mortgage rates are a bargain as compared to just 1 year ago.

In early-June 2011, the average 30-year fixed rate mortgage nationwide was higher by 88 basis points, or 0.88%. If you are among the many U.S. homeowners who bought or refinanced a home around that time, refinancing to today’s mortgage rates could save you 10% or more on your payment.  

Home buyers have measurably more buying power, too.

Here is how mortgage payments on a typical 30-year fixed rate mortgage have changed in 12 months :

  • June 2011 : $509.66 principal + interest per $100,000 borrowed
  • June 2012 : $458.59 principal + interest per $100,000 borrowed

Setting the math to a real-life example, a homeowner whose $350,000, 30-year fixed rate mortgage dates to last June would recognize monthly savings of at least $179 per month just by refinancing into a new 30-year fixed rate mortgage at today’s current levels. That’s more than $2,145 in payment savings per year.

Even after accounting for the required loan discount points and closing costs, the “break-even point” on a refinance like that can come quickly.

Mortgage rates have been dropping but there’s no promise they’ll fall forever. Once rates reverse higher, they’re expected to rise sharply. Therefore, if you’re planning to buy a home or refinance one in California , consider locking in a mortgage rate while mortgage rates are low.

The market looks good for that today.

What’s Ahead For Mortgage Rates This Week : June 11, 2012

Spain Bailout USD$125 billionMortgage markets worsened last week, halting a multi-week mortgage rate winning streak in Arizona and nationwide. With little economic news on which to trade, investors took their cues from the world’s central banks.

Fed Chairman Ben Bernanke neither dismissed nor promised new market stimulus in the near future, nor did leaders in the Eurozone. China, however, did cut its interest rates for the first time since the start of the global financial crisis.

Conforming mortgage rates edged higher amid a series of volatile trading sessions. Mortgage bonds moved more sharply as compared to prior weeks and analysts expect volatility to continue.

Last week, the biggest story was the ongoing deterioration of confidence within the Eurozone. While Greece continues to struggle under its national debt load, Spain emerged as the area’s newest bailout candidate. Then, on Saturday, the bailout was confirmed.

In seeking up to 100 billion euros ($125 billion), Spain becomes the fourth European Union nation to seek bailout funds since the debt crisis began nearly three years ago. 

The Spain bailout temporarily overshadows investor concern for Greece and the nation-state’s June 17 election.

Sunday, the citizens of Greece will vote to elect a new government, the outcome of which may determine whether Greece remains a member of the European Union. If Greece leaves the EU, it would likely make a negative impact on equities markets, and would benefit U.S. mortgage rates.

This week, mortgage markets will take their cues from the political and economic developments abroad. Initially, investors are looking favorably upon the Spain resolution, and mortgage rates are rising as a result. As the Greek election nears, however, that trend may change.

With little or no data set for release, this week’s mortgage rates are subject to investor sentiment. Expect volatility.

Phoenix Leads Annual Home Price Gains, According To Case-Shiller Index

Case-Shiller Index

Standard & Poors released its March 2012 Case-Shiller Index last week. The index is meant to measure changes in home prices from month-to-month, and from year-to-year, in select U.S. cities.

According to the report, home values rose in 12 of the Case-Shiller Index’s 20 tracked markets, and one market remained unchanged.

Of the Case-Shiller markets, Phoenix, Arizona posted the largest one-year gain, climbing 6.1 percent. Atlanta, Georgia posted the largest one-year loss. Values falling more than seventeen percent there year-over-year.

Overall, the Case-Shiller Index was relatively unchanged in March as compared to the month prior, but down nearly 3 percent on an annual basis. Nationwide, says Standard & Poor’s, home values are back to the levels of late-2002.

Don’t be overly concerned, however. Though widely-cited, the Case-Shiller Index is a flawed and misleading metric. It’s methodology almost guarantees it.

The first flaw in the Case-Shiller Index is its limited geography. Despite there being more than 3,100 municipalities nationwide, the Case-Shiller Index tracks just 20 of them. They’re not the 20 largest ones, either. Houston, Philadelphia, San Antonio, San Jose are specifically excluded from the Case-Shiller Index and each is among the Top 10 Most Populous Cities in the United States.

Minneapolis (#48) and Tampa (#55), by contrast, are included.

The Case-Shiller Index’s second flaw is that only tracks the sales of single-family, detached homes. Sales of condominiums and multi-unit homes carry no weight in the index whatsoever — even in cities such as Chicago and New York in which condos can account for a large percentage of the overall real estate market.

And, lastly, when the Case-Shiller Index is published, it’s published on a two-month delay. Buyers and sellers in Tempe don’t need housing data from two months ago — they need data from today. The Case-Shiller Index tells us what housing was, in other words. It doesn’t tell us how housing is

Buyers and sellers need real-time, actionable information. You can’t get that from the flawed Case-Shiller Index. For more accurate, relevant real estate data, talk to your real estate professional instead. 

FHA To Change Its Mortgage Insurance Premium Schedule Monday, June 11, 2012

New FHA MIPBeginning Monday, June 11, the FHA is changing its mortgage insurance premium schedule for the second time this year.

Some FHA mortgage applicants will pay lower mortgage insurance premiums going forward. Others will pay more. The new premiums apply to all FHA mortgages, both purchase and refinance.

The MIP update will be the 5th time in four years that the FHA has changed its mortgage insurance premium schedule.

FHA-backed homeowners who have not refinanced within the last 3 years will benefit from the new MIP. This is because, beginning with all FHA Case Numbers assigned on, or after, June 11, 2012, homeowners whose current FHA mortgage pre-dates June 1, 2009 will be entitled to dramatically reduced annual mortgage insurance premiums and almost zero upfront MIP via the FHA Streamline Refinance program.

Whereas new FHA applicants may pay up to 1.25% per year for annual mortgage insurance plus 175 basis points at closing for upfront MIP, the “grandfathered” FHA applicants will pay just 0.55% per year for mortgage insurance and 1 basis point at closing.

Assuming an FHA loan size of $200,000, the savings are large :

  • New FHA applicant : $208 per month for annual MIP; $3,500 due at closing for upfront MIP.
  • Pre-June 2009 FHA applicant : $92 per month for annual MIP; $20 due at closing for upfront MIP.

The premiums apply to all FHA mortgage applicants, regardless of loan product or term. For example, 15-year FHA mortgage will follow the same mortgage insurance premium schedule as a 30-year FHA mortgages.

Another class of FHA-backed homeowners won’t get so lucky. For homeowners in high-cost areas whose mortgages are between $625,500 and the local FHA loan limit, annual mortgage insurance premiums will be raised by 0.25% for all 15-year and 30-year loan terms.

For loan sizes above $625,500, the new annual FHA mortgage insurance premiums are as follows :

  • Loan term of 15 years or fewer, loan-to-value of 90% or less : 0.35% per year
  • Loan term of 15 years or fewer, loan-to-value greater than 90% : 0.60% per year
  • Loan term of more than 15 years, loan-to-value of 95% or less : 1.45% per year
  • Loan term of more than 15 years, loan-to-value greater than 95% : 1.50% per year

FHA-backed homeowners with loan terms of 15 years or fewer, and with loan-to-values below 78%, are exempt from annual MIP. Upfront MIP payments, however, remain mandatory.

The FHA continues to tinker with its mortgage insurance premiums, attempting to strike a balance between affordability for its homeowners and solvency for its program. Experts expect the FHA to change its premiums again. And, when it does, it’s likely that premiums will rise.

If your FHA mortgage will be for more than $625,000, and you plan to make a purchase or refinance application soon, it’s best to get your FHA Case Number prior to Monday, June 11. Otherwise, you’ll pay higher annual MIP.

Against a $700,000 mortgage, the extra 0.25% in MIP per year will add $1,750 to your annual housing payment.

Simple Real Estate Definitions : Home Inspection

Get a home inspectionWhen you preview homes as a home buyer, you can get a good feel for the home’s visible traits — its finishes, its room counts, and its landscaping, for example. What you can’t get a feel for, though, is the home’s “bones”.

It’s for this reason that real estate professionals recommend that you have a property formally inspected immediately after going into contract for it.

A home inspection is a thorough, top-to-bottom check-up of a property’s structure and systems. It is not the same as a home appraisal, which is a valuation of the property. By contrast, home inspections are an objective report on a home’s physical condition.

Home inspections are performed by home inspectors who will typically do the following :

  • Check heating and cooling systems for leaks and efficiency
  • Check electrical systems for safety and soundness of design
  • Check plumbing systems for venting, distribution, and drainage

In addition, a home inspector will review a home’s roofing system; its doors, windows and garages; plus, any attic spaces and basements, where appropriate.

A home inspection may also uncover out-of-code electrical work that municipalities required to be fixed by law.

Meanwhile, it’s not just home buyers who can order inspections. Sellers can order them, too.

One recommended tactic is for a home seller to have the home inspected prior to listing for sale so that all required repairs can be made in advance of showing the home. This can speed up and simplify the sales process, and may help your home sell at a higher price. Buyers often prefer homes in “move-in” ready condition.

A thorough home inspection can take up to 6 hours to complete, depending on the size of the home.

U.S. Posts Its 20th Straight Month Of Job Growth

Non-Farm Payrolls 2010-2012For the second straight year, the jobs market looks to be slowing into the summer.

Last Friday, in its monthly Non-Farm Payrolls report for May 2012, the Bureau of Labor Statistics reported 69,000 net new jobs created, plus a one-tick rise in the national Unemployment Rate to 8.2%.

2012 is shaping up like 2011, it appears.

Last year, between May and August, the jobs market was decidedly worse as compared to the rest of the year, adding just 80,000 jobs on average per month as compared to 190,000 new jobs created on average during each of the other 8 months.

This year, a similar slowdown may be in store. 

Although the May jobs report marks the 20th consecutive month during which the U.S. economy added new jobs, the reported figure fell well short of analyst expectations, which called for 150,000 net new jobs last month.

In addition, it was found that the previously-reported tallies for new jobs created in March and April were overstated by a total of forty-seven thousand jobs. This lowered the overall net new jobs created last month to 22,000.

Mortgage rates in Scottsdale are falling on the news.

Since the jobs report’s release, 30-year fixed rate mortgage rates have dropped below Freddie Mac’s reported 3.75% mortgage rate for borrowers willing to pay 0.7 discount points plus closing costs; and, the 15-year fixed rate mortgage has dropped farther below 3.00%.

The weaker-than-expected data has moved Wall Street investors away from stock markets in favor of the relative safety of bond markets, a market which includes the one for mortgage-backed bonds. When mortgage-backed bonds are in demand like this, it helps to push down mortgage rates nationwide.

That’s exactly what we’re seeing.

Mortgage rates are expected to make new lows this week, in part, because of U.S. employment weakness. Should this year’s jobs market rebound like in 2011, though, look for mortgage rates to climb back shortly.

What’s Ahead For Mortgage Rates : Week Of June 4, 2012

Unemployment RateMortgage markets improved last week in response to ongoing concerns for the European Union and an across-the-board weakening in U.S. economic data — including the much-watched jobs report.

Conforming mortgage rates in Nevada eased lower last week, falling to a new all-time low for 6th week in a row. The moves have been modest, however, falling just 15 basis points during that period.

Back then, Freddie Mac reported the average 30-year fixed rate mortgage to be 3.90% for borrowers willing to pay 0.8 discount points plus a full set a closing costs.

Today, it reports a rate of 3.75% with 0.7 discount points plus closing costs.

The total savings today as compared to April 19 is $8 per month plus $100 in discount points per $100,000 borrowed. This is not a huge monthly discount, but it still lowers a monthly payment. Home affordability remains at its highest point in recorded history.

Mortgage rates may move lower still.

Last week, there was little improvement in the Eurozone with respect to Greece and its future as a member of the European Union. In addition, Spain and Italy saw their respective borrowing costs rise sharply.

Also, Spain is in the process of natiionalizing one of its largest lenders and investors fear the Spain’s government will soon seek financial assistance.

The uncertainty for the future of Europe’s economic union has been driving demand for the relatively-safe U.S. mortgage bond asset class, a pattern known in trading circles as “safe haven” buying. The added demand pushes bond prices up, and bond yields (and mortgage rates) down.

The weaker-than-expected May jobs report also contributed to last week’s falling rates. Job growth is tied to the economy and when job growth is soft, investors are less willing to take risks in the equity markets. Here, again, bond markets benefit and mortgage rates fall.

This week, there is little economic data set for release so expect mortgage markets to take their cues for political and economic news from abroad. With mortgage rates low, though, the timing may be right for a rate lock.

Insurance Policies : Which Do You Need, Which Should You Skip?

Insurance is protection against unexpected expenses and insurance policies are available for nearly any scenario you can envision — even your own ransom. But just because an insurance policy is available, that doesn’t mean you should buy it.

Some insurance policies give you good bang for the buck. Others are plain wasteful.

In this 3-minute segment from NBC’s The Today Show, you’ll hear of several common insurance policies and their relative merits to people of Arizona who purchase them.

For example, Americans will spend an estimated $450 million on pet insurance this year. Because of the policies’ restrictions and deductibles, though, it’s an insurance policy that rarely pays off. This is one reason why financial experts often recommend that you pass on purchasing pet insurance.

Within the segment, other reviewed insurance policies include :

  • Mobile phone insurance
  • Flight and travel insurance
  • Extended warranties for electronics
  • Umbrella policies
  • Renters insurance

There’s also discussion about home warranties, and why you should avoid policies that last longer than one year.

Insurance should be an important part of your overall financial plan. However, the key is to have the proper policies in place, with an appropriate amount of coverage. Review your policies annually and keep your coverage current.