FOMC Statement: Key Fed Rate Unchanged; Policymakers Monitor Impact of Asian Flu Outbreak

The Federal Open Market Committee of the Federal Reserve issued its scheduled post-meeting statement Wednesday. Policymakers unanimously decided to leave the target federal funds rate range unchanged at 1.50 to 1.75 percent.

FOMC members reasserted previous views that inflation was “subdued” and the economy was growing at a moderate pace. The Fed typically bases decisions about interest rates on its dual mandate of achieving maximum employment and an annual inflation rate of 2.00 percent.

U.S. Economy Strong, Fed Chair Sees No Immediate Risk From China

FOMC cut the target interest rate range three times in 2019 to offset higher prices associated with a trade war with China, but the Committee considered recent progress in trade negotiations as an indication that there was no current need for further rate cuts. Fed Chair Jerome Powell said he was not concerned about immediate risks from China.

In its current assessment of economic conditions, the Fed cited a strong labor market and job growth but said that business investments and exports were weak. Core inflation readings, which exclude volatile food and fuel sectors, consistently ran below 2.00 percent. The FOMC changed language in its statement to indicate a goal of achieving an inflation rate of 2.00 percent; previous statements referred to an inflation goal of near 2.00 percent.

Committee members will continue to monitor current and developing economic conditions to determine when or if to change the benchmark interest rate range in future meetings.

Fed Chair: Fed Is Monitoring Potential Impact Of Coronavirus Outbreak

Concerns over trade conflicts with China were overshadowed by an outbreak of a strain of Asian influenza in China. The disease, caused by a coronavirus, is extremely contagious and spreads quickly. This could impact global economic conditions as international air travel and shipping may be limited or stopped to prevent further spread of the virus.

Fed Chair Jerome Powell said that although the Fed is not worried about an immediate threat, the FOMC members would continue to monitor how and where the current outbreak of Asian influenza spreads to determine if changes to the Fed’s monetary policy positions are necessary. Tensions in the Middle East were not mentioned in the FOMC statement or Fed Chair Jerome Powell’s post-meeting statement.

 

According to a report that was recently published by the United States Census Bureau, the average mortgage payment has been dropping. According to the bureau, the average payment is just over $1,500 per month. This is shockingly close to the average cost of renting, which is just under $1,500 per month. 

This data shows that the average mortgage payment is declining, down by around three percent in the past 18 months. This trend is expected to continue. Some people might be surprised that the average mortgage rate is dropping, given that the average real estate value continues to rise across the country. There are a few reasons why mortgage payments are dropping.

Why The Average Mortgage Payment Is In Decline

The average mortgage rate is dropping because the average interest rate applied to each home loan is dropping as well. They are hovering around three-year lows. 

This means that even though the principal of the loan that someone might take out to purchase a home is staying the same (or going up), the total cost of the mortgage is going down. This is great news for anyone who is looking to buy a home in the near future. Low interest rates may make the cost of buying a home more affordable. 

The Importance Of The Average Mortgage Payment

It is important to remember that the average mortgage payment is simply a statistical measure. These statistics are evaluations of the overall trend. In reality, every mortgage is going to be different. Two people who are buying properties that are very similar may end up with mortgages that look very different.

The mortgage payment is based on numerous factors that can vary widely from person to person. In addition to the interest rate applied to the loan, other factors include the size of the down payment, the buyer’s credit score, how much debt someone might have, their average income, and the possible requirement of private mortgage insurance (PMI).

Lowering A Monthly Mortgage Payment

Anyone looking to lower their monthly mortgage payment has a few tools at his or her disposal. Consider making a larger down payment, improving the credit score, or reducing any current debts. This can help someone negotiate for more favorable mortgage terms.

Consult with your trusted home mortgage professional to discuss your best financing options.

Case-Shiller Home Price Indices reported that national growth of home prices rose by 0.30 percent in November. Analysts said that slim inventories of available homes boosted home prices. Whether or not home price growth continues gaining speed depends on variables including supplies of homes for sale, affordability and home-buyer confidence in the economy.

Mr. Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices said, “It is, of course, too soon to say whether this marks an end to the deceleration [of home price growth] or is merely a pause in the longer-term trend.”

Phoenix Holds First Place In Home-Price Growth For 6 Consecutive Months

Case-Shiller’s 20-City Home Price Index showed that all cities tracked reported year-over-year growth in home prices after seasonal adjustments. Phoenix, Arizona held the top position with home price growth of 5.90 percent; Charlotte, North Carolina held second place in the 20-City Index with 5.20 percent growth in home prices and Tampa, Florida held third place with year-over-year home price growth of 5.00 percent.

The Case-Shiller 20-City Home Price Index posted a year-over-year gain of 2.60 percent in November and home prices rose by 0.10 percent in November as compared to October. Case-Shiller reported that home price growth increased by 3.50 percent nationally on a seasonally adjusted annual basis.

Buyers Seeking Affordable Homes Inland

Home-buyers sought less expensive homes in inland states as high-priced homes in coastal regions continued to be unaffordable for many. Slim supplies of homes contributed to bidding wars that drove home prices higher. Analysts said that home prices are set to drop in high-cost markets as the home-buyers move to more affordable markets.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported a 4.90 percent gain in November home prices for properties associated with mortgages owned by Fannie Mae and Freddie Mac; this reading was compiled on a seasonally-adjusted annual basis.

FHFA data noted that the Mountain Region reported slower month-to-month growth in home prices in November, but all geographic regions reported positive growth in home prices year-over-year. The Mountain region includes the states of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming; these states typically offer a lower cost of living and affordable home prices as compared to high priced coastal areas.

Eight Signs You're Ready To Stop Renting And Buy A HomeFor many people, owning a home is seen as a rite of passage. At the same time, purchasing a home is expensive. As a result, many people end up renting for an extended period of time.

Here are a few signs that someone is ready to stop renting and purchase a home.

1. Rental Prices Keep Going Up

Year after year, rental prices are going to keep going up. While the rental company is going to claim that these increases are consistent with the industry, they tend to be exorbitant. As a result, those who are tired of their rent being increased should think about buying property instead.

2. The Credit Score Has Gone Up

Someone’s credit score is going to play a major role in the mortgage approval process. Anyone whose credit score has gone up recently should think about buying property.

3. Debt Management Is Second Nature

Before taking out a mortgage, someone is going to have to be good at managing debt. A mortgage is simply another form of debt. It needs to be managed properly.

4. There Is A Liquidity Fund In Place

The cost of owning a home extends far beyond the mortgage. Anyone who is thinking about owning property is going to have to have money set aside to cover additional costs. These include repairs, maintenance, and homeowners’ insurance.

5. There Is Money For A Down Payment

There is going to be a large check due upfront. A down payment is essential when it comes to buying a home. In addition, be sure to set aside money for closing costs as well.

6. You’re Going To Settle Down

When someone is thinking about buying a home, they need to stay in the same place for an extended period of time. When someone buys and sells homes quickly, they are likely to lose money to closing costs.

7. A Major Life Change Is Happening

Many people elect to buy a home after a major life change. This might come in the form of marriage. This might also come on the back of having kids. These major life changes can trigger someone to settle down and buy a home.

8. Your Vision Of The Future Is Clear

Those who know where their life is headed in the near future are in a great position to buy a home. If the future is clear, you are ready for the responsibilities of homeownership.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional to discuss financing options.

What’s Ahead For Mortgage Rates This Week – January 27th, 2020Last week’s economic reporting was slim due to the observance of the Martin Luther King Jr. holiday. The National Association of Realtors® reported on sales of previously owned homes and the Veterans Administration announced changes to its home loan programs. Weekly reports on mortgage rates and initial unemployment claims were also released.

Sales Pace of  Pre-owned Homes Rose 3.60 Percent in December

The sales pace of previously-owned homes jumped by 3.60 percent on a seasonally-adjusted annual basis. December’s sales pace rose to 5.54 million sales. 5.35 million homes were sold on a seasonally-adjusted annual basis in November. Sales of new and pre-owned homes rose 10.60 percent year-over-year.

The number of available homes for sale reached its lowest reading since the National Association of Realtors® started tracking sales in 1999. There was a three-month supply of homes for sale in December as compared to a 3.70 month supply of homes available in  November. Real estate pros typically consider a six-month supply of homes to balance market conditions evenly between buyers and sellers.

December’s data indicates that housing markets are skewed in favor of sellers, which increases challenges for buyers relying on mortgage loans or moderate-income buyers seeking affordable homes.

High demand for homes encourages bidding wars and cash offers that grab sellers’ attention at the expense of traditional purchase offers contingent on mortgage financing. Moderate-income buyers may require additional approvals from mortgage insurance companies or programs geared toward first-time buyers.

Veterans Home Loans: No More Loan Limits in 2020

As of January 1, 2020, VA home loans are no longer subject to loan limits based on property location. Past regulations included home loan limits based on maximum loan amounts determined by the county where a veteran’s prospective home was located.

Removing loan limits streamlines VA loan approval and can avoid problems caused if a VA home loan limit is lower than a home’s appraised value. More veterans are expected to gain the advantage of no down payment required for VA loans. Veterans with less than full VA loan entitlement remain subject to loan limits.

Mortgage Rates, Fall as New Jobless Claims Rise

Freddie Mac reported the lowest average mortgage rates in three months last week. Rates for 30-year fixed-rate mortgages averaged 3.60 percent and were five basis points lower. The average rate for a 15-year fixed-rate mortgage averaged 3.04 percent and was five basis points lower.

5/1 adjustable rate mortgages had an average rate of 3.28 percent, which was 11 basis points lower than in the prior week.

First-time jobless claims rose by 4000 claims to 211,000 new claims filed. Analysts said that the rise in first-time claims did not indicate more layoffs.

What’s Ahead

This week’s scheduled economic reports include Case-Shiller Home Price Indices, new home sales and the Federal Open Market Committee of the Federal Reserve will issue its customary post-meeting statement. Weekly readings on mortgage rates and new jobless claims will also be released.

The Secrets Of Selling Real EstateWhen it comes to selling a home, there is a lot to think about. While most people know that the best time to list a home is in the Spring (due to the fervor of the summer), the real estate market keeps rumbling along no matter what time of year it is.

With this in mind, it is important to have a firm strategy in place. This comes in the form of a real estate professional. In addition to trusting the professionals, there are a few other important points to keep in mind.

Don’t Trust The Online Estimates

The internet has impacted almost every area of the economy. This includes real estate. Many homeowners love visiting sites to get an estimate of how much the home is worth. Unfortunately, these online estimates are often inaccurate.

There is not a real estate professional employed by these sites who is driving around taking estimates on homes. There is no way these sites can know what renovations have been done or what improvements have been made. These make a large difference in the overall value of a home.

Hiring A Trained Professional

Those who are looking to get the most out of their home need to hire a professional real estate agent. These agents have the training and expertise necessary to make sure a house sells for as much as possible. These agents also have access to additional selling tools that are not available to the general public.

Furthermore, a real estate agent is going to earn a commission on the sale of a house. For this reason, real estate agents have a lot of incentive to sell a home for as much as possible. It is important to trust the professionals for help.

Letting A House Sit On The Market

It is also important for people to know when to list their home and when to remove it. The longer a home sits on the market, the harder it is going to be to sell that home for what it is worth. As a home sits on the market, the excitement surrounding it is going to fade. Your agent is qualified to guide you through the process.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional to discuss financing options.

Home Warranties Are They Worth ItOwning a home comes with major responsibilities and also offers major questions. One of the biggest questions that people will have to answer is whether or not they want to take out a home warranty. In order to decide whether a home warranty is worth it, it is important to first understand what a home warranty is.

What Is A Home Warranty?

A home warranty is not the same thing as home insurance. First of all, homeowners insurance is something that is required to purchase a home in the first place. Home insurance is in place to protect the homeowner, and the lender, from disaster.

In contrast, a home warranty is not required but might be offered by the lender or a third party. A home warranty is designed to cover the repairs that come with routine wear and tear on various home appliances. This includes items such as the HVAC system, plumbing, and electricity (but everyone needs to read the information on any home warranty policy to see exactly what is covered.) Therefore, what might not be covered by home insurance is covered by a home warranty and vice versa. 

The Benefits Of Having A Home Warranty

One of the biggest benefits that come with a home warranty policy is peace of mind. Every home appliance is going to break down at some point as a result of routine wear and tear. When this happens, it can create a large, unexpected expense.

When this expense arises, it is helpful to have a policy that covers the cost of repairs. People might be surprised to hear that homeowner’s insurance policies are not going to cover routine repairs on appliances resulting from wear and tear. This unexpected expense can cause a lot of stress for someone’s budget. The cost of this repair can be covered by a home warranty.

The Drawbacks Of A Home Warranty

On the other hand, there are also a few drawbacks to note. The biggest drawback of a home warranty is that people might end up paying for the cost of the repair simply via the cost of a home warranty. Many of the repairs that are not covered by homeowner’s insurance can be covered out of pocket. Therefore, having a home warranty policy might be redundant.

It is important to weigh the benefits and drawbacks of a home warranty before deciding whether or not the policy is worth it. 

If you are interested in buying a new home or refinancing your current property, be sure to consult with your trusted home mortgage professional to discuss financing options.

Safety First! How Often Should You Clean Your ChimneyChimneys are as old as homes themselves. Yet, when it comes to chores, cleaning the chimney is one of the most neglected tasks. While people often think about yard work and housework, they often forget to clean the chimney.

When someone neglects to clean the chimney, they risk the development of mold. This can influence the efficiency of the chimney, causing debris to back up into the home. For this reason, it is essential for people to clean their chimneys on a regular schedule. 

Make Sure To Inspect The Chimney Properly

Chimneys are used seasonally. When the temperature starts to drop outside, people are going to start up the fireplace and use the chimney. Prior to lighting up the chimney for the next season, it is important to make sure they are properly inspected.

Cleaning grout and mold is an important part of making sure the chimney works properly. When someone is cozied up in front of the fireplace, it is important to note that there is an active fire happening. About 25,00 fires per year start due to an issue with the chimney. Make sure that all routine maintenance has been performed on the chimney for that year before firing it up.

Why Clean the Chimney In The First Place?

When it comes to fires, safety should always come first. This the biggest reason why chimneys need to be thoroughly cleaned. When someone cleans the chimney, they are working to prevent home fires. 

The more people use the fireplace, the more soot is going to build up in the chimney. The end result is flammable substances backing up in the chimney. This can be dangerous because it might lead to a fire when people least expect it. To prevent this from happening, be sure to clean the chimney on a regular basis.

How Often Should A Chimney Be Cleaned?

At a minimum, it is important to clean the chimney at least once per year. Annual maintenance on the chimney should be a readily accepted part of owning a home. This includes both cleaning the chimney and inspecting it for any structural flaws.

Some people may want to clean the chimney themselves. This is acceptable; however, it is also recommended to have a professional come in and take a look at the chimney. An extra set of eyes on the chimney may help prevent a fire from breaking out in the future.

If you are in the market for a new home or interested in refinancing your current property, be sure to consult with your trusted home mortgage professional about financing options.

What’s Ahead For Mortgage Rates This Week – January 21st, 2020Last week’s economic reports included the National Association of Home Builders Housing Market Index along with readings on consumer sentiment and weekly reports on mortgage rates and new jobless claims.

NAHB: Builder Confidence d in Housing Markets Drops 1 Point in January

Homebuilder confidence in overall housing market conditions dropped one point in January, but analysts said that a new trade deal would likely benefit builder interests. The National Association of Home Builders Housing Market Index dropped to an index reading of 75 from December’s reading of 76; December’s reading was the highest since 1999.

The reading for builder confidence in January 2019 was 58; while any reading over 50 is considered positive, builder confidence increased significantly year-over-year.

Sub-index readings used to calculate the overall housing market index reading were mixed;  builder confidence in current housing market conditions fell -3 points to an index reading of 81.

Homebuilder confidence in market conditions over the next six months was unchanged at a reading of 79. Homebuilder confidence in buyer traffic levels in new housing developments rose one point to 58; index readings over 50 for buyer traffic are unusual.

NAHB reported mixed readings for homebuilder sentiment regionally. Builder confidence in market conditions in the Western region rose four points; builder confidence in the Northeastern region rose three points and builder confidence readings for the South were unchanged. Builder confidence in housing market conditions in the Midwest fell seven points.

Factors contributing to high builder confidence in housing markets include high demand for homes and a potential easing of materials prices due to recent trade agreements. Builders continue to battle high materials and labor costs that reduce their profit margins. Analysts note that narrower profit margins contribute to builders’ongoing focus on building high-end homes.

Mortgage Rates Rise; New Jobless Claims Fall

Average mortgage rates rose incrementally last week; Freddie Mac reported a one basis point gain for 30-year-fixed-rate mortgages to 3.65 percent. Rates for 15-year fixed-rate mortgages averaged 3.09 percent and were two basis points higher. Rates for 5/1 adjustable rate mortgages averaged 3.39 percent and were nine basis points higher.

New jobless claims were lower than expected with 204,000 initial claims filed. Analysts expected 220,000 new claims and 214,000 new claims were filed the prior week. Initial jobless claims fell for the fifth consecutive week, which indicates a strong labor market.

The University of Michigan reported a lower index reading for its Consumer Sentiment Index in January. The monthly reading fell to 99.1 from December’s reading of 99.3; the projected reading for January was 99.6. The Consumer Sentiment Index reflects consumers’ attitudes toward their personal finances along with their views of overall business and buying conditions.

What’s Ahead

This week’s scheduled economic reports include sales of previously-owned homes and the Chicago Fed’sNational Index report; weekly readings on mortgage rates and new jobless claims will also be released.

5 Important Mistakes To Avoid When Selling A HomeSellers of homes often make mistakes that are not in their best interests. Here are common mistakes people make when selling a home and how to avoid them.

Using Bad Photography

Using lousy photos or no photos to promote the property for sale is foolish. Professional photography is not so difficult or expensive that sellers should settle for the use of bad photos. Sometimes all the potential buyers will see is the photos they find online. If the photos are bad or not there at all, then that is the end of their interests. 

To stimulate interest in a property, it is even better to use a high-quality video walk through than simple photos. This allows a buyer to enjoy a virtual showing of the property.

Allowing Emotions To Control The Process

Sometimes, buyers should step aside and let the experts guide the process. One example of this is the decisions about staging a home for sale. Staging is getting the home in an immaculate condition that is most attractive to buyers. 

An important part of staging is the depersonalization of the home. This means removing any photos or family items. The reason for doing this is to allow the potential buyer to imagine their family living in the home and not have them think about the previous residents. 

This part of the process may be quite emotional for the seller because it is the first clear sign that they are truly giving up a home. Those emotions are natural but should not stand in the way of getting the home ready for sale.

For Sale By Owner

It may be tempting to try to sell a home without utilizing the services of a professional REALTOR®. However, many studies show that the net price that sellers receive for selling a home on their own is about the same as if they used a real estate agent. 

The buyer pays the real estate agent’s commission. Usually, the price achieved by a professional real estate agency is higher than what an owner may achieve alone. The reason for this is that buyers expect to get a discount from the market price for a for-sale-by-owner (FSBO) home. Another consideration is that marketing a home is not easy for amateurs to do, so FSBO homes may languish on the market for a long time before selling.

Too Pricey

Listing a home for a price that is higher than the market value, automatically puts the seller at a disadvantage. It discourages a potential buyer from making an offer. Eventually, this may lead to having to discount the listing price. This makes the home look like something may be wrong with it.

Not Making Repairs

Homes that have a pre-inspection and all the necessary repairs made are much more attractive to buyers. This is true, even if the price includes a discount from market value to allow for the estimated repair costs. It is mostly a matter of convenience for buyers who want a home that is ready to move in and does not immediately need repairs to be made.

Summary

Avoiding these common, and sometimes costly, mistakes may help sellers to sell their homes faster and hopefully get a higher price. Work with a qualified REALTOR® to learn more about how to get a home ready for sale, what price to ask for, when to list it, and what to do to maximize the sales price.

If you are in the market for a new home or interested in refinancing your current property, be sure to consult with your trusted home mortgage professional to discuss financing options.