The market was surprised by these numbers, which were much more healthy than expected. Expectations were an unemployment rate of 8.5% and 155,000 new jobs added.

How Does This Affect Mortgage Rates?

This report is the latest in a trend indicating the economy is on the mend. As the economy becomes stronger, we will likely see rates and home prices go higher and today is no exception as mortgage rates have gone up today.

Since we’ve put in a good number of weeks at or around all time historical lows, we’ve put in a bottom of sorts. The longer we stay near this bottom, the more it becomes a place of support, from a technical point of view.

Should I Lock My Rate Now? Where Is the Market Going Next?

We don’t know where the market will go next, but there are a lot of signs indicating that we’re moving higher. This can change though depending on the time of day and what is going on with the US Economy and can even be affected by news coming out of Europe.

We can give you realtime rate quote updates, simply call us or request a fast rate quote. Additionally, we can give you free advice on what loan options exist and we can also put together a strategy financing your existing or new home that will give you the lowest payment possible.

What Does The Plan Do?

The goal of the program is to help borrowers that are current on their mortgages refinance into lower-interest federally insured loans through the FHA. Borrowers would qualify even if  they are underwater on their mortgages (their homes are worth less than is owed on them) and would enable these homeowners to take advantage of the historically low interest rates available today.

According to senior administration officials, the plan would be run by the FHA (Federal Housing Administration) and is reported to cost between $5 billion to $10 billion, money which would be raised by imposing levies on banks.

President Obama On His New Refinancing Plan

“This plan, like the other actions we’ve taken, will not help the neighbors down the street who bought a house they couldn’t afford and then walked away and left a foreclosed home behind. It’s not designed for those who’ve acted irresponsibly, but it can help those who’ve acted responsibly.”

Obama’s Refinance Plan Eligibility Requirements

The big question is who qualifies for the program and how?

To Be Eligible:

1. Borrowers need to be current on their mortgages    
2. No missed a mortgage payment in at least six months  
3. Tere is a minimum credit score requirement (FICO) of 580
4. Must be employed
5. Must have a conforming loan (between $271,050 and $729,750 depending on their location)   
6. Officials have also stated that an appraisal would not be necessary.

Estimates are that the plan could help 3.5 million borrowers in addition to the 11 million expected to qualify for the existing refinance program for those with Fannie Mae and Freddie Mac loans (HARP). The one sticking point could be the mortgage insurance premiums charged by the FHA. If rolled into the loan, they would put a borrower further underwater.

How Do I Learn More About This Plan?

Details about the plan are still emerging and it still faces approval by Congress. There are also critics of the plan, so whether or not its components will be approved by Congress in their current form still waits to be seen.

To get FREE future updates about Obama’s refinance plan, please subscribe to our RSS Feed at the top of this article!

The last time the index was higher than 100.1 was in April 2010 when it reached 111.5. This prior record was fueled by buyers that were rising to meet the deadline for the home buyer tax credit that was expiring.

About the Pending Home Sales Index

Pending Home Sales Index (PHSI) is released during the first week of each month. It is designed to be a leading indicator of housing activity.

The index measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.

How This Affects Potential Home Buyers

There have been some signs in the past month that housing may have put in its bottom. If this turns out to be the case, potential home buyers that are sitting on the sidelines may do better to purchase their home sooner rather than later. Once there is strong confirmation that a bottom has been reached, it is very likely that even more buyers will rush into the market (some Realtors are already reporting the lowest housing inventories in years) which will push housing prices higher very quickly.

Before You Shop: Get Pre-Qualified

The first step in shopping for your new home is understanding how much home you can afford. This prevents you from falling in love with a home that is not an option. Getting pre-qualified means you know what your budget is, which means you can save time and money only looking for homes that are truly a fit for you. Getting pre-qualified is free and only a phone call away, please don’t hesitate if you have any questions.

Events Affecting Mortgage Rates This Week

This week will see European Union leaders meet. Any developments coming out these meetings have the potential to move mortgage rates. Specifically, bad news may result rates going lower and good new will likely push rates higher. This occurs because bad news means investors move their money away from stocks (stock markets go down) and put it into bonds, which typically means mortgage rates decrease.

The other big event is non-farm payrolls, otherwise known as the Jobs Report that is being released on Friday. Since jobs are a key component of economic health for the country, these numbers can move mortgage rates on a dime.

Negative news out of Europe and disappointing news with the Jobs Report could sent mortgage rates to new all time historical lows. Positive news from these events could signal a change in the current trend and start the beginning of mortgage rates moving off of the current lows.

Economic Calendar for Week of January 30, 2012

• Monday - Personal Income & Outlays,
• Tuesday - S&P Case-Schiller, Chicago PMI, Consumer Confidence
• Wednesday - ADP Employment Report, ISM Mfg Index, Construction Spending
• Thursday - Jobless Claims, Productivity & Costs,
• Friday - Employment Situation: Non-Farm Payrolls, Factory Orders

Should I lock My Mortgage Rate Now or Wait?

Right now may very well be one of the best times in history to lock in a historically low mortgage rates. But wait, what if you’re not sure what size loan you qualify for or what program is right for you? We can help educated you, free of charge, about what loan programs are available and which one will help fit your needs the best. We can also put together a common sense purchase or refinance strategy that fits your unique needs. If you have questions this help is only a phone call away!

In a press release,  the FOMC announced it’s thoughts on the state of the economy today and moving forward in addition to its plans for future monetary policy. The equities and bond markets pay close attention to the statements that come out of FOMC meetings as monetary policy as set by the FOMC can significantly impact our economy and the economies around the world.

The FOMC: Extends Exceptionally Low Levels for the Federal Funds Rate at Least Through Late 2014

The FOMC made several statements that have sent mortgage rates back to all time historical lows.

1. The committee extended its “forward guidance” on interest rates stating that “economic conditions” are likely to “warrant exceptionally low levels for the federal funds rate at least through late 2014”.
2. Current economic conditions: Described as “expanding moderately”. This means that conditions are essentially unchanged, the key point being that they have not worsened, which is good.
3. The committee “expects to maintain a highly accommodate stance for monetary policy.” This tells the markets that they’re still willing and able to take measures in the future, especially in relation to inflation, which is good. This is as opposed to stepping aside and letting the market play out, which can be bad if the market can in fact, improve with some monetary intervention.

From the FOMC Press Release:

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

How The Fed’s Statements Affect You and Your Mortgage

Immediately after hearing the FOMC’s statement, mortgage rates fell back down to the all time historical lows they were at last week. This latest development is only the latest in a series of events over the past few months where mortgage rates have been at all time historical lows or set new lows. The unprecedented window is a very unique opportunity to get into a mortgage at the lowest rates we have seen in our lifetime.

We can help you understand how much you qualify for if you are purchasing a new home and help you understand what mortgage best fits your needs. We only need a few minutes with no obligation to put together a strategy that best fits your financial needs and goals for your home purchase or refinance of your existing loan.

Summary of Last Week’s Positive Economic News: 

• Single Family Housing Starts: Up 4.4% over November
• Existing Home Sales: Rose 5.0%, rising for third consecutive month
• Jobs: Jobless claims hit lowest level since April 2008

The Week Ahead: FOMC Meeting and GDP

The two items with the most potential to move mortgage rates are the FOMC (Federal Open Market Committee) press conference on Wednesday and the release of GDP data on Friday.

The tone and remarks coming from the FOMC can help investors understand where the FOMC’s position on where the economy is, where they believe it is going and what type of actions, if any, they expect to be taking in the future. The market can turn on a dime for better or worse on nothing more than one unexpected statement from Fed Chairman Bernanke or other FOMC members. The market will be watching the FOMC and GDP numbers closely.

Economic Calendar for Week of January 23, 2012

• Monday - none
• Tuesday - none
• Wednesday - Petroleum Status Report, FOMC Press Conference
• Thursday - Durable Goods Orders, Jobless Claims, New Home Sales
• Friday - GDP, Consumer Sentiment

How This May Affect the Cost of Purchasing a Home in the Long Term

This data suggests that purchasing a home may be cheaper in the short term over the long term. As the market gains strength, buyers are likely to continue increasing, which could drive home values up. This coupled with the reality that we will very likely be seeing mortgage rates come of their current all time historical lows mean that we may be in a key window where purchasing a home may have significantly lower costs than it may in the coming months and years.

Positive Employment Data Released

There was also positive news coming from the the Labor Department which said that only 352,000 new claims for unemployment benefits were filed last week. This was a decline from the previous week’s revised total of 402,000. This is positive news for employment and shows increased strength in the employment sector.

Mortgage Outlook for the Week of January 23, 2012

Next week will see the FOMC meet on January 24-25. Additionally, there will be data released for Pending Home Sales, Jobless Claims, GDP and New Home Sales.

If you don’t get an opportunity to met the current owners before you buy, there are important questions you need answers to that you should ask the selling agent. That being said, an unexpected visit from a former owner can give you the chance to ask lingering questions and learn more about the house from before it was yours.

What to Ask the Home Owner or Realtor Before You Buy

• How recently were the plumbing and other systems updated?
• Were there any problems during the updates?
• Are there other issues with the neighborhood, area, or the home?

What To Ask a Former Owner After the Sale

Undoubtedly, when a stranger comes to your door, it can be a little disconcerting. When it’s the former owner of your home, however, you can take advantage of the fact by asking them questions your home inspector might not have elaborated on, or about things that weren’t disclosed during the actual sale. Some of these questions can include:

• How receptive were the neighbors to renovations and updates to the home?
• Do they have any favorite contractors they can suggest?
• Do they have any thoughts for upgrades that they were considering before they sold. They may have ideas and thoughts about improving the home that hadn’t occurred to you? 
• Do they have any stories about the home’s history? 

Of course, the former owner may wish to ask you questions too. Many sellers often still feel a personal connection to the house and want to share that with you.

What Former Owners Might Say

It isn’t uncommon  for former owners return for sentimental reasons. They may have had children grow up in the home, or it might have been their first major purchase. Ultimately, they often just want to make sure you’re caring for their former residence. They even may ask you questions about your family, or how you plan to change the house to fit your tastes. In any case, meeting your home’s former owners is a chance to learn more about your home and learn about your home’s history.

There are some important pieces of data being released later in the week, but overall this is a light week for data that could move mortgage rates with Tuesday being the lightest day for data.

On Wednesday the PPI (Producer Price Index)  and Industrial Production data will be released and have the ability to affect mortgage rates. On Thursday, the CPI (Consumer Price Index) and Housing Starts are being released. Finally, on Friday, the Existing Home Sales data, released by the NAR (National Association of Realtors) will be watched by the market as well.

Economic Calendar for Week of January 16, 2012

• Monday - Martin Luther King Holiday Observed
• Tuesday - Empire State Mfg Survey
• Wednesday - Producer Price Index, Treasury International Capital, Industrial Production, Housing Market Index
• Thursday - Consumer Price Index, Housing Starts, Jobless Claims, Philadelphia Fed Survey,
• Friday - Existing Home Sales

Rates Are At or Near Record Lows, What Does This Mean For Me?

The truth is that it depends. It depends on your current needs, goals and plans for your current or future mortgage. If you are looking to refinance your existing mortgage or purchase a new home, we can help you understand what programs best fit your needs and help you decide if locking in a low rate is the best option for you. We can give you this guidance free of charge, so please do not hesitate to call us directly or request a rate quote on this site.

Why Does Europe Affect My Mortgage Rate?

Why do rates move downward because of bad new coming from Europe? The concern in Europe is that governments there may default on their debt obligations, which would also affect US banks and other banks around the world.

Since European concerns affect the US, investors pull their money from US equities (stocks) in times of crisis and place their money in safer vehicles like bonds. The net affect of placing more money into bonds is that mortgage rates move lower. So while you may see indices in the US like the DOW and S&P performing poorly because of investor cash outflows to bonds, this positively affects the rate at which you can obtain a mortgage!

Jobless Claims, Consumer Sentiment and Beige Book Data Released

The FOMC (Federal Open Market Committee) released its Beige Book data on Wednesday and reported moderate growth since the last report. This shows that while the Economy is not recovering as quickly as many would like, it’s at least going in the right direction, which data only a few months ago indicated was not the case.

On Thursday, Jobless Claims data showed that climbed by 24,000 to 399,000 in the week ending January 7, 2012, which was slightly higher than expected.

Today, Consumer Sentiment climbed 4 from 69.9, which was slightly higher than expectations. This demonstrates that consumers are are experiencing a slight increase in confidence over the state of affairs with the Economy.