Preparing In Case of Earthquakes

We had intended on posting a disaster preparedness article in September as it is Emergency Preparedness Month. However, in light of the recent earthquake in Napa, we wanted to get a few quick highlights about earthquake preparedness in particular out to you.

The Napa quake was the largest in the Bay Area since Loma Prieta in 1989. We Californians haven’t had a major quake in the state since the Northridge quake in 1994.

After a long hiatus, it’s time for a refresher course on how we can all prepare for earthquakes. The four main steps you need to follow when preparing for disasters are:

1. Get a Kit.
2. Make a Plan.
3. Be Informed.
4. Get Involved.

Today we’re just going to focus on putting together a kit and making a plan.

Your kit is made up of medical supplies, food and water, pet supplies, and other things. After a major earthquake, phones, cell phone towers, water, gas and electricity could be out for a few days, if not longer. Think about everything you would need to survive comfortably during that time.

Medical Kit

What should be in your kit?

The Red Cross recommends:

• 2 absorbent compress dressings (5 x 9 inches)
• 25 adhesive bandages (assorted sizes)
• 1 adhesive cloth tape (10 yards x 1 inch)
• 5 antibiotic ointment packets (approximately 1 gram)
• 5 antiseptic wipe packets
• 2 packets of aspirin (81 mg each)
• 1 blanket (space blanket)
• 1 breathing barrier (with one-way valve)
• 1 instant cold compress
• 2 pair of nonlatex gloves (size: large)
• 2 hydrocortisone ointment packets (approximately 1 gram each)
• Scissors
• 1 roller bandage (3 inches wide)
• 1 roller bandage (4 inches wide)
• 5 sterile gauze pads (3 x 3 inches)
• 5 sterile gauze pads (4 x 4 inches)
• Oral thermometer (non-mercury/nonglass)
• 2 triangular bandages
• Tweezers
• First aid instruction booklet

You should also have at least a few days’ supply of your prescriptions, pain killers, and any other over-the-counter remedies you use on a regular basis.

Food and Water

Red Cross recommends having food and water for three days, and having three gallons of water per person. That doesn’t include cooking water. It doesn’t hurt to have additional water on hand for that purpose.

Unless you use your gas grill or charcoal barbecue (in which case, have extra canisters or bags on hand), you’ll be eating cold food. If you camp, ensure you have extra containers for your camp stove. And never, ever use it indoors. The carbon monoxide fumes are deadly.

Having a supply of canned beans is always a good go-to meal. Just be certain you have a usable manual can opener.

Pets

If you have to go to a shelter, you won’t be able to bring your pet with you. However, in times of emergency, there are organizations that set up shelters for pets. You will want to have food and water for each of your pets. Additionally, you’ll need a secure leash or traveling container.

Other Things

Keep an old fashioned plug-in-the-wall phone even if you’ve switched to internet phone. Your cable or fiber may well be knocked out and would stay that way as long as your electricity is out. You will want to be able to make a phone call in case of an emergency. Some people even keep a landline just in case.

Have extra batteries for flashlights and radios. There are special battery packs for tablets and phones, so keep a supply on hand of those as well. You can also look into solar powered chargers for your phone.

Keep a supply of cleaning wipes around. You can get some heavy duty ones from backpacking stores. You’ll want to keep your water for cooking and drinking.

If the weather gets cold in your area, make sure you have extra blankets available.

Making a Plan

Have a central point of contact with someone in another city or state. If a disaster strikes, everyone should contact that individual and let them know what’s going on. Then that contact can help organize who needs help, and where everyone is, as well as be a good source of news since local broadcasting may be unavailable.

Fact or Fiction: A Tax On Real Estate Sales

On January 1, 2013, the Net Investment tax went into effect. Despite numerous articles and columns reminding consumers that this tax does not apply to every real estate sale, rumors continue to keep flying all over the country, claiming that the Health Reform legislation Congress enacted includes a sales tax on all real estate sales. While there is a tax, it does not apply to everyone.

The Health Care and Education Reconciliation Act of 2010 was signed into law by President Obama on March 30, 2010. It is a comprehensive and extremely complex piece of legislation. One section (1402) is entitled “Unearned Income Medicare Contribution” and does impose a 3.8 percent tax on any profit on the sale of real estate – residential or investment.

But it is aimed at high-income consumers, who comprise a small majority of American citizens.

Let’s look at the true facts of this new law.

First, it is not a sales tax, nor does it impose any transfer or recordation tax. It is often called a “medicare” tax because the moneys received will be allocated to the Medicare Trust Fund, which is part of the Social Security System.

Next, if your income (technically called “adjusted gross income) is less than $200,000, you are home free. The income thresholds are clearly spelled out in the law. If you are married and file a joint tax return with your spouse, the law will apply only if your income is over $250,000. (If you and your spouse opt to file a separate tax return, the threshold is reduced to $125,000. For all other taxpayers, you have to earn more than $200,000 in order to be under the new law.

The up-to-$500,000 exclusion of gain for married couples filing a joint tax return (or up-to-$250,000 for single taxpayers) has not been repealed. Nor has the right to deduct mortgage interest and real estate tax payment been eliminated.

How is the tax calculated? It is a complex formula that could be called “the accountant’s protection act”. As a taxpayer, you (or your financial advisor) must determine which is less: the gain you have made on the sale of your house or the amount that your income exceeds the appropriate threshold.

Complicated? Yes. Let’s look at these examples. Your adjusted gross income is $150,000. You sell your house and made a profit of $400,000. There is no change in the way you determine your gain: you take your purchase price, add any major improvements you have made over the years, and subtract that number from the net sales price. Based on this formula, you and your spouse have owned and lived in the property for at least two out of the five years before it was sold. Accordingly, you are eligible to exclude all of your profit; you are not subject to the new 3.8 tax. Keep the money and enjoy.

Change the example so that your adjusted gross income is $300,000. Since you are eligible to take the profit exclusion of up-to-$500,000, once again you do not have to pay the Medicare tax; your entire gain is excluded, and thus there is no profit to tax.

But let’s assume you strike it rich and have made a profit of $600,000. Your income is $300,000. You can only exclude $500,000 under current law, so you will have to pay capital gains tax on the remaining balance. The rate currently is 20 percent, so you will owe Uncle Sam $20,000 ($100,000 x 20%).

But since your income is over the threshold, you now have to pay the 3.8 percent tax. But on what amount?

As indicated earlier, the tax is based on lesser of your profit or the difference between the threshold and your income. Your profit is $100,000. The difference between your income and the threshold is $50,000 ($300,000 – $250,000). In our example, the lower number is $50,000, and you will have to pay an additional $1900 to the IRS (3.8% x $50,000).

According to statistics provided by the National Association of Realtors, the median average sales price for homes in the United States (as of July, 2014) was $213.400. Clearly, none of these homes could make a profit of even $250,000, so if you qualify for the exclusion of gain requirements, you will not be impacted by this new law. Those requirements are: you have to have owned and used the property as your principal residence for two out of the five years before it is sold.

Of course, in homes where a large profit will be made, some home owners may be hit with this tax. But the large profit that you make should offset the nominal tax that has to be paid.

Since the law applies to all forms of real estate, including vacation homes, you should consider consulting with your tax and financial advisors as to your exposure.

Market Commentary for the Week of August 25th

This week has six economic reports scheduled for release that are relevant to mortgage rates in addition to two Treasury auctions that can potentially affect rates. There is data being posted four of the five days with Wednesday the only day with nothing scheduled, but none of the reports are expected to be a market mover. Still, most of the week’s releases carry enough significance to affect mortgage rates if their results vary from forecasts.

July’s New Home Sales data is the first report of the week, coming Monday at 10:00 AM ET. This report will give us another indication of housing sector strength and mortgage credit demand, but only tracks a small portion of all home sales. The majority of U.S. home sales were covered in last week’s Existing Home Sales report. It usually doesn’t have much of an impact on bond prices or mortgage rates unless it varies greatly from forecasts. Current forecasts are calling for an increase in sales of newly constructed homes from June to July. A larger increase in sales would hint at housing sector strength, making the data negative for mortgage rates.

The Commerce Department will post July’s Durable Goods Orders early Tuesday morning, giving us an important measure of manufacturing sector strength. This report tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as appliances, electronics and airplanes. Analysts are expecting to see an increase of approximately 6% in new orders, indicating manufacturing sector strength. This data is known to be quite volatile from month to month, so an increase of this size doesn’t raise too much attention. However, a decent sized decline is good news for the bond market and mortgage rates as it means manufacturing activity is likely softening. A secondary reading the excludes more volatile transportation-related orders is expected to rise 0.5%. The softer the reading, the better the news it is for the bond and mortgage markets.

Tuesday also has August’s Consumer Confidence Index (CCI) form the Conference Board at 10:00 AM ET. This index measures consumer sentiment about their personal financial situations, which helps us measure consumer willingness to spend. If consumers are feeling more confident in their own finances, they are more apt to make a large purchase in the near future, fueling economic growth. A decline in confidence would indicate that surveyed consumers probably will not be buying something big in the immediate future. That would be a sign of economic weakness and should drive bond prices higher, helping to lower mortgage rates Tuesday. It is expected to show a reading of 88.3, which would be a decline from July’s 90.9. The lower the reading, the better the news it is for bonds and mortgage rates.

Thursday’s only monthly or quarterly data is the first revision to the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. The GDP is the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. This reading is the second of three that we see each quarter. Last month’s preliminary reading revealed that the economy grew at an annual rate of 4.0%. Thursday’s revision is expected to show no change to that estimate. A downward revision should help lower mortgage rates, especially if the inflation portion of the release does not get revised higher. On the other hand, an upward revision would indicate the economy was stronger than previously thought, making it bad news for mortgage rates. There will be a final revision issued next month, but it probably will have little impact on mortgage rates since traders will be more interested in the current quarter’s activity.

Friday is a multi-release day with two pieces of economic data set to be posted. July’s Personal Income and Outlays report is the first at 8:30 AM ET. This data will give us a measure of consumer ability to spend and current spending habits. Rising income means consumers have more money to spend. It is expected to show an increase of 0.3% in income and a 0.1% increase in spending. Since consumer spending makes up over two-thirds of the U.S. economy, weaker than expected numbers would be considered good news for the bond market and mortgage pricing.

The second report of the morning will be the University of Michigan’s revised Index of Consumer Sentiment for August. This sentiment index helps us track consumer willingness to spend similarly to Tuesday’s CCI. It is expected to show a reading of 80.0, up from August’s preliminary reading of 79.2. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates because waning confidence usually means that consumers are less likely to make large purchases in the near future. As with the CCI index, the lower the reading the better the news for mortgage shoppers.

Also worth mentioning are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. There are auctions several days, but the two relevant ones are Wednesday’s 5-year Note and Thursday’s 7-year Note sales. Results of the auctions will be posted at 1:00 PM ET each day. If investor interest is strong in the auctions, it is possible that the broader bond market will rally and mortgage rates could move lower during afternoon trading. However, a lackluster demand could lead to bond selling and higher mortgage rates Wednesday and Thursday afternoons.

Overall, I am expecting to see the most movement in rates Tuesday, but Thursday’s GDP report could be the week’s most important report if it shows a significant revision. Wednesday looks to be the lightest day with nothing of importance scheduled except the moderately important Treasury auction. Even though none of this week’s economic data is considered to be a market mover, we still should see plenty of activity and movement in rates. Therefore, please proceed cautiously if still floating an interest rate and closing in the near future.

Are Free Credit Scores Worth The Price?

We’ve seen the catchy commercials, and have been told it’s our right to see our credit report once a year. But what does it all mean, and is it useful to us?

In prior posts, we talked about how often your credit score fluctuates and how to improve your score.

But today, we’ll go a little more in depth with what is your credit report and what is your credit score.

Your Annual Free Credit Report

By law, you’re entitled to a free copy of your credit report on file once a year. There are three credit reporting agencies

1. Equifax
2. Experian
3. Transunion

So you’ll actually need to get three credit reports, and they should all be free. There is a clearinghouse at AnnualCreditReport where they help you obtain your full credit report.

They are the official site sanctioned by the three bureaus.

Once you receive your report, look for errors. You will need to do some research about how to fix the errors, so take your time and follow their procedures.

You shouldn’t need to hire anyone to do this for you. Most places that promise to fix your credit score go in and dispute all the negative information. Their hope is that they can reverse some of the old negative information easily since the companies that reported it won’t want to do the research.

You can do that yourself, truth be told, and don’t need to pay anyone to do that.

However, be warned that many credit card companies do have the resources to do the research and rarely reverse negative information if it was true to begin with.

The Credit Report Is Not Your Credit Score

The credit score a very complicated beast. If you see a site offering a free credit score, keep in mind that it’s not going to be the same credit score seen by lenders. What you are getting is an estimate based upon your credit report, and not a true snapshot.

Often, sites are trying to get you to sign up for a monitoring service, and they have a free trial period. If you cancel before the end, you will get a free score.

So you can look into that provided you know when and how you have to cancel if you do not want their continuing service.

Or use the free credit score sites, but know what you’re getting.

From Yahoo Finance on Here’s What You Should Know About Free Credit Scores:

If you want to find out your actual credit score you usually have to pay and endure a barrage of ads for all sorts of different credit monitoring products in the meantime.
That all changed this year when several personal finance tools decided to change the game, offering credit scores to consumers for free. A few of note are Credit Sesame, Credit.com and Credit Karma, which all offer free credit scores to people who sign up for their services.
So which site should you choose?

The biggest difference between the scores offered by these sites is which credit reporting agency data they are based on. Credit Sesame offers up the Experian NationalRisk Score, which is based on data collected by Experian only. Similarly, Credit.com bases its free score on Experian data, offering a VantageScore 3.0 and Experian credit score. CreditKarma offers two scores – your VantageScore credit score and your TransRisk credit score – which are both based on TransUnion data.

Their final recommendation is to focus on which risk category you find yourself in (example: low risk, high risk, excellent, etc.).

If you’re going to be financing a car or a home loan, you should be aware of what your actual score is and identify ways to move up to the next bracket. The better your score and risk category, the lower the interest rates.

But Wait, You Can Get It For Free

San Jose based FICO, the first U.S. credit scoring company, rolled out a program that allows consumers access to their credit scores for free, as long as their lender is on board.

So far only two lenders have signed up (Barclaycard and First Bankcard). But FICO is in talks with many more banks and lenders to offer this program to consumers.

Under FICO’s Score Open Access program, customers are able to see their credit scores as often as their lenders order them from FICO, which could be every month, said Anthony Sprauve, a spokesman for FICO. “We are trying very hard to remove the mystery about the FICO score and the perception that the score is handed down from on high and educate people about their score so they understand the factors that drive the score,” Sprauve said.
Customers can also see the top two factors affecting their score — things like late payments, a short credit history or high balances — and get information to help them better understand their score and what impacts it.
Lenders will determine exactly what format they use to grant customers access. They may send out e-mails or letters or include the score with their credit card or banking statements. They can also provide access through the customer’s online account, Sprauve said.

Additionally, Discover Financial Services has announced that they will not only provide free credit scores on their statements, but that Discover card holders will also the FICO Score Meter and educational content to help them better understand what the score means.

Mortgage News Roundup - Know Risks of Buying In-Laws' Home

Here’s a great article about 5 myths and misconceptions about purchasing a home.

Myth #1: Buying a home is a great investment

If the housing bust taught us anything, it’s that the housing market can be just as risky as the stock market. Many homes lost on average about a third of their value.

Myth #3: The three most important factors are location, location, location.

Finding the perfect home used to mean that it had to be in a well-established community with low crime, good schools and far from nuisances like high traffic malls. But these days some of the best deals are found in neighborhoods that have yet to reach their peak.

Look for future potential as well as current conditions.

Myth #4: Buy the worst home in the best neighborhood.

The advice used to seem sound because you can fix up a bad home but you can’t clean up a whole neighborhood.

Those bad homes, though, can come with some pretty huge flaws. If you’re already paying a premium for a home, you may not want to have to do major repair work such as repiping or reroofing.

Know risks of buying in-laws’ home

Sometimes, Life hands you an interesting cocktail of lemons. What if your in-laws used up all their retirement savings and still had a mortgage. And you were in a position where you could buy their home so they could stay there. Is it a good idea? That was the question posed to the LA Times. What are the risks of buying your in-laws’ house?

There are options such as quit claim and direct sale. But the first thing you should do is consult a tax professional and an attorney with experience in estate and elder law. If the in-laws sell to you at a below market value, you run into issues with gift tax issues. Then there’s issues with their income and how that affects Medicaid. There are other risks to your in-laws. If you were sued and lost, the creditors could come after the house as part of your assets. You could sell the home without their consent, and you would have a claim on the property if you and your spouse split up.

There are some difficult conversations ahead about what is an affordable lifestyle, and what is the best way to handle either taking over mortgage payments, buying the home outright, or looking into other options such as having the in-laws move in with you. And those answers won’t come quickly. Spend some time figuring out what’s going to be the best solution for everyone in the long term.

Thinking About Getting Solar Panels?

A lot of people are looking into green alternatives for electricity that also gives them control over their power. Since most of us in urban areas can’t have wind generators, many are purchasing or leasing solar panels.

Usually installed on your roof, solar panels convert sunshine into electricity which can then be stored in large batteries, or the solar panels can heat up water reducing the load on your hot water heater.

Types of solar

• Power
• Water heater

Solar water heaters are designed to keep water heated and can be used in the home in conjunction with a standard hot water heater, or in a pool. Installing one will reduce your electric or gas bill depending upon how your hot water is heated.

For the rest of this blog, we’ll just be focusing on replacing electricity purchased off the grid.

Photovoltaic cells are put together in plates to convert solar energy to electrical energy and are a clean way of providing electricity for your home or office.

A typical home solar electric system consists of :

• Solar cells
• Modules or panels (which consist of solar cells)
• Arrays (which consist of modules)
• Balance-of-system parts.

Considerations

Before you start the process, you’ll want to pull out your electricity usage for two years. Many service providers have that information online. You’ll use different amounts at different times of the year, and it’s also dependent upon how much of your home is run by gas.

You also will want to think about your budget. If you’re paying $350/month on average just for your electrical bill, then you can figure out how long it will take for your return on investment if you’re saving that much each month.

When talking to a professional installer, you’ll want to get answers to:

1. How much sun do you get?
2. Will your roof support the panels?
3. How many panels will I need to replace all of my electricity usage?

Chances are that your solar panels will not replace all of your electrical usage especially if you use an air conditioner. And for some people, buying off the grid will be cheaper than if you use solar panels.

Benefits

1. Lower utility bills
2. Reduce impact on the environment
3. Increase energy independence

Here’s a great article that takes the common disadvantages that people talk about with solar panels on a home and provides rebuttals.

Here’s two by National Geographic discussing

• pro’s and con’s
• advantages and disadvantages

Options

• Purchase the solar panels.
• Lease the solar panels.

There are companies around that will install the panels for free as long as you sign a contract to pay them for the solar energy. They also guarantee it will be cheaper than purchasing off the grid. Read all of the paperwork carefully.

Some questions to consider are what happens after the end of the contract and you don’t want to continue? Will they repair your roof when they remove the panels? Who is responsible for the repair of the panels?

Solar panels or solar water systems are an investment and you should consider the long term rather then any short term benefits when making your investment.

It’s also not clear if having solar panels will increase or decrease the resale value of your home. You will need to talk with a reputable real estate agent who is familiar with resale values in your area.

Want to know what they’re really like? Here’s a blog post on GigaOm from Kevin Tofel who converted to solar and how it changed his lifestyle.

Would you be interested in investing in solar energy for your home?

Understanding Your Credit Scores

When you apply for a mortgage loan, the first thing your lender will do is check your credit history, but they don’t read through your credit reports page by page. They get a snapshot of your credit called a credit score.

Fair Isaac Corporation is the company that compiles your credit scores based on the information in your credit reports.

You’ve probably noticed the use of plurals — scores, reports. That’s because there are three credit bureaus, along with Fair Isaac, that are under the jurisdiction of the Federal Trade Commission. The three bureaus are called Equifax, Experian, and TransUnion.

The credit bureaus operate independently, and each collects its own data about your credit from banks, landlords, credit card companies, retailers, and other sources. Each credit bureau also has its own credit scoring methodology.

When Fair Isaac scores your credit reports, it creates a FICO score that will be anywhere from 300 to 850. The lender buys your credit score and determines how much of a risk you are based on how you handle your other financial obligations.

Credit scores impact your interest rate. According to an example by the Consumer Federation of America and Fair Isaac Corporation, a 720 FICO score can help a borrower qualify for a low 5.5% 30-year-fixed-rate mortgage. A different borrower with a 520 score will pay 8.5% or $2,400 more annually on a $100,000 loan.

Five areas of your credit can impact your FICO score.

• Your payment history — about 35%
• How much you owe — about 30%
• Length of credit history — about 15%
• New credit — about 10%
• Credit mix — about 10%

How to improve your credit scores

Delinquent accounts, high debt-to-income levels, and numerous open lines of credit (credit cards with high limits) can all conspire to lower your scores considerably.

1. Pay your bills on time. Don’t worry if you’ve missed a payment, catch up and stay current.

2. Keep balances as low as possible on your credit cards.

3. Don’t move your credit from card to card. If a credit card company is charging more you higher interest than you feel is fair, contact them and negotiate a lower interest rate. Or pay the card off in full.

4. Don’t open more credit cards than you need.

5. Credit card companies reward their good customers with higher loan limits. If you don’t want more credit with this company, call them and ask them to return you to your previous limit.

Having a high credit score can not only get you a lower mortgage interest rate lower, it also speeds your mortgage approval along.

Market Commentary for the Week of August 18th

This week brings us the release of four pieces of monthly economic data in addition to the minutes from the last FOMC meeting. There is nothing of relevance to mortgage rates scheduled for release Monday, so look for the stock markets to drive bond trading and mortgage rates until we get the start of this week’s activities.

The first piece of data will be posted at 8:30 AM Tuesday when July’s Consumer Price Index (CPI) is released. The CPI is one of the most important inflation reports we see each month as it measures inflation at the consumer level of the economy. As with last week’s Producer Price Index, there are also two readings in the report. Analysts are expecting to see a 0.1% increase in the overall index and a 0.1% rise in the more important core data reading that excludes more volatile food and energy prices. Declines in the readings, especially in the core data, should lead to lower mortgage rates since it would mean inflation is still not a threat to the economy. On the other hand, stronger than expected readings will likely lead to an increase in mortgage pricing Tuesday.

July’s Housing Starts will also be released early Tuesday morning, which will give us an indication of housing sector strength and future mortgage credit demand. It usually doesn’t cause much movement in mortgage rates unless it varies greatly from forecasts. Tuesday’s release is expected to show a fairly sizable increase in construction starts of new homes. The lower the number of starts, the better the news for the bond market, as it would indicate a weaker than expected housing sector.

Wednesday has no relevant economic data set for release, but we will get the minutes from the last FOMC meeting during afternoon hours. There is a pretty good possibility of the markets reacting to them following their release. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and how recent geopolitical events may impact the domestic and global economies. The goal is to form opinions about when Fed Chair Yellen and friends are likely to start raising key short-term interest rates. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor, so be prepared for a move, but not surprised if the impact on rates is minimal.

Thursday has the final two reports, both at 10:00 AM ET. July’s Existing Home Sales is one, coming from the National Association of Realtors. It will give us a measurement of housing sector strength and mortgage credit demand. It covers most home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts’ forecasts. It is expected to show a small decline from June’s sales, meaning the housing sector weakened slightly last month. This would generally be good news for the bond market and mortgage rates because a strengthening housing sector makes broader economic growth more likely. However, unless the report shows a much stronger or weaker level of sales, it will likely have a minimal impact on Thursday’s mortgage pricing.

The Conference Board is a New York-based business research group that will also post its Leading Economic Indicators (LEI) for July late Thursday morning. This index attempts to measure economic activity over the next three to six months and is considered to be moderately important. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening more than thought. However, a weaker reading means that the economy may not grow as much as predicted, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage rates Thursday if the stock markets remain calm and the housing report shows no surprises. It is expected to show an increase of 0.7 % in the index, indicating moderate economic growth over the next couple of months. It will take a sizable difference between forecasts and its actual reading for this report to noticeably influence mortgage rates.

Also worth noting is the annual central banker and economist conference in Jackson Hole, Wyoming. There have been major events to come out of this event in the past while others have been non-factors. Federal Reserve Chair Janet Yellen is scheduled to speak Friday but the conference runs Thursday through Saturday, so any impact on trading or mortgage rates will happen late in the week.

Overall, Tuesday is likely to be the most active day for mortgage rates and Monday appears to be the best candidate for least important. Stocks will probably be a contributing factor to bond movement several days also. We saw bonds rally late last week, pushing the benchmark 10-year Treasury Note yield down to 2.34% due partly to geopolitical news out of Ukraine. Those knee-jerk reactions tend to unwind or reverse very quickly, so now that the weekend has been fairly quiet there, we could see bonds start the week under pressure. Therefore, I recommend proceeding cautiously if still floating an interest rate and closing in the near future.

What to Plant for the End of Summer

You want your place to look nice with some lovely flowers. But the weather is still hot during the day, and getting cooler at night, plus the days are getting shorter. So what should you plant in those planter boxes or pots on the front porch to keep the colors bright?

Better Homes & Gardens recommends these perennials for the transition of seasons. Check out the article to see all eleven recommendations.

1. Bee Balm – The firework-like flowers draw the eye through the garden and lure butterflies and hummingbirds.
2. Pink-and-White Celosia - This sun-loving, old-fashioned annual produces a profusion of 4- to 5-inch feathery plumes from summer into fall.
3. Pincushion Flower – This robust, rapidly growing, sun-loving perennial produces blue, pink, or violet blooms on erect gray-green stems from midsummer to fall.
4. Cupid’s Dart – Large dark-center blue, violet, or white blooms rise on sturdy stems with heart-shape leaves.
5. Zinnia – the more you cut, the more it blooms.

And don’t forget the classic marigolds and primroses for bursts of color.

How to Design A Flower Bowl

So you’ve bought all the flowers from your local garden center and you get home and look at the empty planter and then look at the flowers. If you’re not naturally inclined towards flower arranging, don’t panic.

You can create flower arrangements in your pots and planters that will make your friends and neighbors go “Wow, that looks terrific.”

1. Plan the structure. When you’re selecting plants in 4″ or 6″ pots, you need to think about their eventual height, shape and growth habit.
2. Where are they growing? Full sun? Partial sun? It’s important to group similar plants together. It’s also important to combine plants with similar moisture requirements.
3. Look to contrast textures. If you have waxy leaves, mix that with feathery ferns.
4. Be bold with the colors. Generate energy and excitement by combining complimentary colors such as purple and orange or yellow and blue. Or paint a more visually soothing composition by limiting yourself to related colors such as blues and pinks or reds and yellows.

How to Care for The Flowers

When caring for your color bowls, you’ll need to take into account where the planter is and what kind of moisture level the plant needs.

If you use self-watering containers, just keep an eye on the water level. If you use a drip system, align the amount of water dripped with the requirements of the plants.

A ceramic planter will stay cooler than a plastic one but that’s because the water is evaporating and you may need to water more frequently. To determine when the plant needs watering, stick your finger down into the soil and if is dry water the plant thoroughly. Remember to water in the morning or evening to prevent water from just evaporating before it can get to the plant’s roots.

Frequent watering will wash fertilizer out of the soil, and the plant will deplete the limited soil nutrients much more rapidly, so a regular feeding program should be established according to the type of plant and the manufacturer’s directions. During the growing season, look into either a slow release type plant food or a soluble complete fertilizer.

Mortgage News Roundup - 4 Way to Help Your Kid Buy a Home

Today we’re going to look at how to buy a flipped home, how home buyers can avoid a money pit, four ways to help your kid buy a house and remind you again that 2014 is a great time to buy a home. Contact a reputable loan officer and find out what you can afford. If you’ve been on the fence, talking with a professional will help you put together a plan of action.

CNN’s Money Magazine published the 5 top consumer complaints. Number two was home improvement and construction. When renovations or repairs go wrong, it can take a serious financial — and emotional — toll, said Susan Grant, director of consumer protection for the Consumer Federation of America which conducted the survey. In Florida, for example, one contractor falsely told a 92-year-old woman that another contractor had used his company’s materials on her roof and that he needed to inspect it. He then claimed she had a leaky roof that needed immediate attention and eventually convinced her to pay more than $20,000 for repairs, much of which was unnecessary or extremely overpriced, according to the report.

If you feel something is wrong, you’re probably right. Trust your instincts and don’t shy away from getting help.

How Homebuyers Can Avoid Falling for a Money Pit

And speaking of draining money into home improvement and construction that spins out of control. So what should you do if you buy a house that doesn’t live up to your expectations? Your options are limited, unfortunately.

• Litigation. You could hire a lawyer and go after the sellers or builder who sold you the property. In fact, that’s about the only practical solution if you want to get your money back. But it depends on the laws in your state.
• Home Inspection Always get the home inspected. It won’t find everything but it’s the best defense you have from buying a problem house. They can’t open up walls, but you should look for one who has an infrared camera as that can help detect leaks in the ceiling.
• Talk with the Neighbors They may be more than happy to tell you what the owner complained about.

4 Ways to Help Your Kid Buy a Home

Read the full article on how to help your children buy a home on Yahoo Finance.

To sum it up:

1. Help with the down payment
2. Be a co-signer on the mortgage
3. Buy in cash
4. Be the lender

No matter which route you choose, it’s important for anyone who takes on a mortgage to know the risks — and benefits — that come with it.

How to Buy a Flipped House

Buyers often assume a flipped home is like new. The newly renovated home gets top dollar, and the buyer assumes it is perfect.

Most buyers don’t realize that some contractors or property “flippers” are anxious to move on to the next job, and their work may be rushed and subpar as a result. Experienced flippers also want to get the most money for their investment and know certain tricks for hiding problems like charging the air conditioning unit to mask leaks.

To prevent a money pit situation, you will need to be vigilant. Always get a detailed home inspection (we’re repeating this tip because it’s that important). Review all the disclosures. Review the receipts for the work done.

Be on the lookout for telltale signs of rushed worked such as:

• Light switch plates that aren’t flush with the wall or are at an angle.
• Crown molding that isn’t completely matched at the corner.
• Gaps between the counter tops and the wall.
• Gaps in bathroom tile.
• Doors or cabinets that don’t close tight.

And find out what you can about the flipper. You want to research if there have been any complaints filed for prior houses. Did they live in the house. Talk with any friends who are involved in real estate and see if they’ve heard about the flipper’s reputation.

Usually there’s something not quite right about every house. The more you know going into a purchase, the smaller the problem will be.

Getting Ready to Go Back To School

Some schools have already started, some start next week, and some start the week after that. Private schools often start after Labor Day. Today we’ll offer up some tips and tricks to make the transition from the lazy summer back to the structured school schedule as painless as possible.

Some kids are ready to go back as soon as possible because they miss their friends. Other kids will be hiding under their beds. Kids transitioning from one type of school to another will generally have the most anxiety due to the newness of the situation.

Getting Your Kids Ready

Most kids are secretly happy to go back to school so they can see their friends. If your little one has concerns, remind them that it’s a brand new year, and they have a chance to be different than last year if they want to.

Also, if you act excited and talk up how much fun they’re going to have, it will become infectious (but don’t overdo it. They can sense when you’re telling them what they want to hear). Start a countdown calendar. Get them involved in picking out a new backpack and lunch box. Have them plan ahead what they want to wear on the first day and for their school picture.

If they’re having some real concerns, sit down and have a heart to heart. Let them know if you had challenges, and how you overcame them. Then help them to think back to other challenges they had, and how they handled it. This will reinforce their belief in themselves.

Discuss any major milestones. If your baby is going into middle school and they get lockers, make it seem like it’s a really important achievement.

And the usual advice is the best advice: Start having your kids go to bed 10 minutes earlier each night and wake up 10 minutes earlier so they’re back in synch with getting up and getting to school on time.

WebMD has 9 Recommendations for Helping Your Child Prepare for Back to School:

• Re-Establish School Routines
• Nurture Independence
• Create a Launch Pad
• Set Up a Time and Place for Homework
• After-School Plans
• Make a Sick-Day Game Plan
• Attend Orientations to Meet and Greet
• Talk to the Teachers
• Make it a Family Affair

Get Yourself Ready

Most schools have emergency card forms to fill out as well as immunization forms, and contact information. Some schools mail them out during the summer so you can fill them out early. If not, expect to get a lot of forms on the first day. You can prepare by finding all of the information ahead of time. Also, double check with your usual emergency contacts to see if they’re still willing, and if they had any change of information as well.

Plan ahead what the lunches will be that first week, if you send in lunch. And make sure you have enough of everything for everyone.

Don’t buy too many school supplies. Have just enough to get them through a few days. Teachers sometimes change their lists year after year and you don’t want to be stuck with a 12 pack of crayons when the teacher wanted them to have a 10 pack of markers.

And don’t feel obligated to go buy all of the supplies on the first day. There’s usually huge lines at your local big box office supply store. Or consider going in the morning when there aren’t the usual crowds. However, don’t be surprised if there’s complaints that you bought the hearts folder when they wanted the peace symbol folder.

When The Day Arrives

If you can, make the morning special with a homemade breakfast to mark the occasion. If you’re lucky, maybe you can even get a picture of everyone. What can be really fun is taking a picture on the last day of school and comparing how much they have grown.

Sneak a note of encouragement into their lunch boxes. The tween girl may roll her eyes but she’ll appreciate the thought.

If you don’t have a special routine like going out to dinner and hear all about the day, look into creating one that meets your family needs and will be special to you.

5 Great Reasons to Buy a Home Right Now

  The nature of market bottoms is that it’s hard to tell one’s occurred until prices and sales volume start to rise again. That’s why the best time to buy is when market conditions suggest a bottom.


That means there’s still some risk for homebuyers, since no one has a crystal ball that predicts the future. To take advantage of low mortgage interest rates and home prices still well below previous records, you may have to take a risk, such as riding out another short-term dip in property values.

But the rewards may be well worth it. Here are five reasons to buy a home right now.

1. More jobs are available

Total nonfarm payrolls rose by 217,000 in June, and the unemployment rate is 6.3 percent, according to the U.S. Bureau of Labor Statistics. Employment increased in professional and business services, health care and social assistance, food services and drinking places, and transportation and warehousing.

2. Houses are a great hedge against inflation

The Labor Department also says the May Computer Price Index is up 2.13 percent year-over-year. The index for all items less food and energy rose 0.3 percent in May, its largest increase since August 2011.

The CPI excludes volatile food and energy, so you can bet that the accelerating cost of things, otherwise known as inflation, also includes housing. You may be paying more for goods and services, but if you’re a homeowner, you’re better off financially. A major asset such as a home, purchased at a fixed cost, becomes more valuable when prices inflate.

3. Housing price increases are slowing

The median existing-home price was $213,400, over 5 percent above May 2013. Considering that the national median existing-home price was $158,800 in January 2011. That’s when the PMI Insurance Company said home prices relative to income are below market fundamentals in more than half of U.S. states. Prices overcorrected during the recession, and then they soared by the double-digits in 2013.

Now housing is correcting once again from an overcorrection. Now’s the time to take advantage of better homebuying conditions.

4. Mortgage interest rates are still low

During the recession, mortgage interest rates for a benchmark 30-year, fixed-rate loan, averaged 4.32 percent. Now they’re close to that and there’s no recession. That means mortgage rates have nowhere to go but up.

5. Pent-up demand ready to release

Since the recession, household formation fell dramatically to one percent of the national population. But considering that the leading age of the largest generation ever – 81 million Echo Boomers — is now over 30, the numbers should be closer to the 2.3% annual growth of the 1970′s, when 78 million Baby Boomers reached adulthood.

The National Association of Homebuilders (NAHB) said about 2.1 million households delayed formation due to the recession which allegedly ended in 2011. Now there’s pent-up demand for housing that should continue to drive home prices higher.

The takeaway

A housing recovery doesn’t occur in a straight line. There are surges and dips. Buyers could wait for better conditions, but the present alignment of falling mortgage interest rates, slower home prices, and larger selection is highly unlikely to reoccur.

This may not be the bottom, but it’s close enough.

Written by Blanche Evans

Market Commentary for the Week of August 11th

This week brings us the release of only four pieces of monthly economic data in addition to two Treasury auctions that have the potential to affect mortgage rates. Despite the fairly low number of reports, we still will likely see a fair amount of movement in the markets and mortgage pricing due to the importance of those economic reports and the likelihood of the geopolitical and financial issues being in the spotlight again. The economic data is set for the middle and late days of the week while the Treasury auctions will take place mid-week.

There is nothing of relevance scheduled to be posted or take place Monday or Tuesday. In the absence of anything on the schedule, look for the stock markets and overseas issues to affect bond trading and mortgage pricing early this week. As long as no major news or events transpire, stock strength will probably lead to bond weakness and higher mortgage rates. If the major stock indexes fall from current levels, bond prices should rise, pushing mortgage rates lower.

August’s Retail Sales data will start the week’s calendar at 8:30 AM Wednesday. This report comes from the Commerce Department and will give us a very important measurement of consumer spending. Consumer level spending figures are extremely relevant to the markets because they make up over two-thirds of the U.S. economy. Current forecasts are calling for a 0.3% increase in sales. Analysts are also calling for a 0.3% rise in sales if more volatile auto transactions are excluded. Larger than expected increases would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would indicate stronger economic growth.

There are two Treasury auctions this week that also have the potential to influence mortgage rates. The first is Wednesday’s 10-year Treasury Note auction, which will be followed by a 30-year Bond auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. If the sales are met with a decent demand from investors, indicating that interest in longer-term securities such as mortgage-related bonds is good, the earlier losses are usually recovered after the results are announced. Results of sales will be posted at 1:00 PM ET of each auction day. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading those days. However, weak levels of interest could lead to broader selling in the bond market that could push mortgage rates higher.

The three remaining reports are all set for Friday morning. The first will be August’s Producer Price Index (PPI) from the Labor Department at 8:30 AM ET, giving us an important measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices. Analysts are predicting a 0.2% increase in the overall index and a rise of 0.2% in the core data. Stronger than expected readings may raise inflation concerns in the bond market. That would be bad news for bonds and mortgage rates because inflation is the number one nemesis of the bond market as it erodes the value of a bond’s future fixed interest payments. As inflation becomes more of a concern in the markets, bonds become less appealing to investors, leading to falling prices, rising yields and higher mortgage rates.

July’s Industrial Production report is scheduled to be posted at 9:15 AM ET Friday. This report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.3% increase from June’s level. A decline would be considered favorable news for bonds and mortgage rates because it would indicate manufacturing sector weakness and broader economic growth would be more difficult if manufacturing activity is slipping.

The last release of the week will be posted by the University of Michigan late Friday morning. Their Index of Consumer Sentiment will give us an indication of consumer confidence, which projects consumer willingness to spend. If a consumer’s confidence in their own financial situation is rising, they are more apt to make large purchases in the near future. But, if they are growing more concerned about their job security or finances, they probably will delay making that large purchase. This influences future consumer spending data and therefore, impacts the financial markets. It is expected to show a reading of 81.7 that would mean confidence was nearly unchanged from July’s level of 81.8. That would be considered slightly favorable news for bonds and mortgage rates. Good news for mortgage shoppers would be a sizable decline in the index.

Overall, Friday is the best candidate to be labeled most important day with most of the week’s economic data scheduled, but we could see noticeable movement in rates Wednesday since it has the single most important release and the 10-year Note auction. The Treasury auctions raise the possibility of afternoon volatility in the middle days, although I would not be surprised to see afternoon changes to mortgage pricing other days also if the crises overseas remain volatile. Accordingly, I strongly recommend maintaining contact with your mortgage professional this week if still floating an interest rate and closing in the near future.

Using Coupons to Save On Your Vacation

Summer vacation is almost over, and you’re ready to make the most of what’s left. So you’ve decided to take the family to Disneyworld or the Grand Canyon, but you’re worried about spending so much money on the food and activities. Worry no more!

Here’s some tips on how to shave off a lot of the extra expenses in order to have a great time. You can even use these tips for your staycation and see places you didn’t know were in your neighborhood.

You can also use these tips for honeymoons or planning for your next vacation.

Theme Park Ideas

Look into buying your tickets in advance, or on the internet. Many parks offer discounts over purchasing at the gates.

Some theme parks have what they call a Cooler Pass where you can bring in your own food. This saves a lot of money as well as frustration since you won’t be standing in long lines for their food which is often not very good. Even if you can’t, consider keeping a cooler in the car and have a family break at lunch time, get your hand stamped, and go eat outside of the park. Most places provide picnic tables, or at least have some trees for shade. This gives you a chance to see how everyone’s doing, reapply sunscreen, and get a few hugs in.

Sign Up for Daily Deals Where You Want to Go

Social coupons like Living Social or Groupon can have really good deals on attractions, events and restaurants. You may also be able to get deals through the local newspaper, so check it out online before you go. Also, if you sign up ahead of time, you can learn about new places and research where they are in comparison to where you’re staying. No matter how great the price, if it’s a long drive, it may not be worth the deal.

Also look into packages from places like Jetsetter. You might find some great destinations for a very affordable price.

Before You Go and Once You’re There

If you’re staying in a hotel, they will probably have racks of coupons for local restaurants and activities. The business gives a small percentage back to the hotel usually, so take these recommendations with a grain of salt. Do your research with local review sites.

When you book your hotel, see if they have packages that include breakfast.

Find the local chamber of commerce. They often have maps with their businesses as well as discount coupons. Like the hotel coupons, you’ll want to do a bit of research to see if it’s what’s best for you. You could also call the local chamber ahead of time and have them send you a packet of information. Some towns have special tourism departments that also can send coupons.

From USA Today:

Museum admissions can add up quickly, even if you’re only seeing a handful of exhibits during your weekend getaway. Ease the pain with an admission-ticket bundle like CityPass, which conveniently packages discounted admissions to your destination’s top attractions. CityPass Seattle, for example, includes admission to six big-city draws, including the Space Needle and the Seattle Aquarium, for $69 (if you paid a la carte, you’d be forking over $128). Plus, you can buy your pass in advance, saving precious time by skipping busy ticketing lines.

Also look into using apps like Yelp and FourSquare. When you check in, they often have deals or coupons. You can research Yelp online to see who is offering a deal before you go as well. From MSN Money:

12. Use discount food apps. If you do dine out, use a restaurant-locating app to find special deals and the best prices. Some of my favorite apps include:

• Yelp Check-Ins
• LocalEats
• KidsEatFree

Split your meal in half, ask the waiter to box it up and use the hotel’s mini fridge for storage. That way, you get two meals for the price of one.
16. Go sightseeing for free. Popular tourist attractions can be pricey, but there are plenty of places you can tour for free. For example, admission to popular plantation homes in Louisiana can cost up to $18 per adult, but the National Park Service hosts free walking tours of the French Quarter in New Orleans.

Planning ahead what you do may save you much money. It will be very useful for figuring out your budget which saves you money overall. Finally, always read the fine print before you buy or use any coupon.

If a tourist walked up to you and asked where was the best place to eat, where would you send them?

Mortgage News Roundup - Waiting to Buy Will Cost You

Hello and welcome to Thursday, again. A fun factoid is that the average age of a home in the United States is 40.

Waiting to Buy Will Cost You

If you’ve been thinking about delaying buying a home until next year, you’ll want to pay attention to this: The house you can afford today may be out of reach a year from now due to rising interest rates and home price appreciation.

More often than not, buyers do not understand the profound effect of rising interest rates on affordability,” said Erin Lantz, vice president of mortgages at Zillow. “Many buyers associate a 1 percentage point interest rate change with a 1 percent change on a piece of clothing or the price of a car, when in fact they are very different.”

As a rule of thumb, Lantz said, a 1 percentage point increase in mortgage rates reduces affordability by 10 percent.

3 Keys to Selling a Home in 2014

If you plan to sell your home in 2014, be aware that buyers have changed since the economic downturn. They’re savvier than ever, and they’re not desperate. Many of today’s buyers are Millennials (also known as Generation Y) who’ve come of age with access to endless information via the Internet. It’s in their DNA to search, and they love photographs and sharing.

So to help your real estate agent sell your home for the best price:

1. Take your photo shoot seriously. People are looking online. Ensure there’s no clutter and that the house is sparkling.Too often, listings go online with photos of a dark room, lights off or blinds closed. And make sure photos are taken. Nothing is worse then a listing without them.
2. Have your home inspected before you list. You don’t want any surprises. If there are any issues, you can choose to repair or not, and price your home accordingly.
3. Throw buyers a bone and be in the good graces of the buyer before, during and after escrow. An example is giving them a shorter close if they like. These little offerings will go a long way toward a speedy and hassle-free escrow.

The bottom line is put yourself in the buyer’s shoes. Actually you may know better since you may be looking to buy another home. So treat them the way you would want to be treated.

What Is the Role of the Real Estate Agent?

According to the National Association of Realtors 2013 Profile of Home Buyers and Sellers, 88 percent of buyers purchase their homes through real estate agents or brokers. That reliance on real estate professionals has steadily increased from 69 percent in 2001.

There was a time where people thought they could handle everything themselves because they could do the research online, and there were programs to generate forms. Unfortunately, they made a lot of costly mistakes, and more people are realizing the role of the real estate agents.

Whether you’re buying or selling, your agent is your guide. Their role is to educate you. Buying and selling a home is a very detailed and complicated process. There are many legal areas that need to be addressed. A good real estate agent will talk to you about the steps, your responsibilities, and then guide you through it.

If you’re selling, the agent will be able to educate you on property values in your area, and what features people are looking for. They help you by putting together a marketing strategy.

If you’re a buyer, the agent will educate you on neighborhoods, and items that could be red flags like power lines or bad schools.

When you work with a buyer’s agent, their fiduciary responsibility is to you. That means you have an expert who is looking out for your best financial interests, an expert who’s contractually bound to do everything in their power to protect you.

For both buyers and sellers, the agent will handle the details of the negotiation process, including the preparation of all necessary offer and counteroffer forms. Once your inspection is done, the agent can also help you negotiate for repairs. An agent can remain detached during potentially emotional discussions.

The real estate agent is experienced and will be able to identify potential pitfalls before you stumble into them. And finally, the buyer’s agent will handle the minutia involved with the offers, mortgage application and the final closing documents. Paperwork that goes along with a real estate transaction can be exhaustive. If you forget to initial a clause or check a box, all those documents will need to be resubmitted. A good real estate agent understands the associated deadlines and details and can help you navigate these complex documents so you don’t have to.

There’s A Lot To Consider When Choosing A Home Inspector

 

Many times, in the course of reviewing transaction files, I will read that an agent has recommended to the buyer that he or she should have the home inspected by a licensed home inspector. While one has to appreciate the earnestness of such advice, it is nonetheless at least a trifle amusing. This is because there is no licensing of home inspectors here in California. California is one of 21 states that do not regulate home inspection services via some sort of licensing mechanism.

Of all people, real estate agents know that the mere possession of a license is no particular guarantee of service quality. Nonetheless, when there is no licensing of what, to many, would seem a fairly technical business, questions do arise as to how one goes about selecting a practitioner. One approach is to look for some sort of professional validation such as certification.

Indeed, a number of professional liability (Errors and Omissions) insurance companies provide incentives to their real estate customers to use certified home inspectors (or, to do the equivalent, obtain a “certified home inspection”). But then the question arises, “Certified by whom?” In some cases the insurance company may name which certifying organizations are acceptable; but, in others, the choice is left to the agent or broker. The insurance company just wants to know the inspector is certified.

Just as possession of a license to do something is not guarantee of quality, neither is the fact that someone has been certified. There are dozens of organizations that provide certification in the home inspection field, just as there are dozens of organizations that provide certifications in various aspects of the real estate business. (One can only imagine how many real estate agents became “certified short sale specialists” during the past few years.)

Some certifying agencies are undoubtedly quite rigorous and good; others, not so much. (As far as home inspectors go, I am neither qualified nor brave enough to single out here which are the really good ones.)

So what is a real estate agent to do when it comes to choosing or referring a home inspector? (I include choosing because that is often what the client wants and requests.) Obviously, in a state where licensing is required, then a license is a must. Secondly, despite what has been said, an inspector should be sought out who has membership and training through one of the professional societies. (It really doesn’t take a whole lot of effort to get an idea of which organizations seem substantial and which appear to be on the fly-by-night side.)

One of the most important things that an agent can do — that most consumers are just not in a position to do — is to ask around amongst one’s peers. And I don’t mean that from the perspective that you want to avoid inspectors who have the reputation of being “deal killers.” Sometimes that reputation just means that they are thorough, which, as a fiduciary, is just what you want. (Although, on the other hand, it is perfectly legitimate not to want someone who is a bad communicator or who leans toward negativity.)

There are many specific questions to be asked: “What are their reports like?” “Do they welcome buyers being present at the inspection?” “What is their level of experience?” “Do they carry professional liability (Errors and Omissions) insurance?”

A home inspection is one of the most important parts of a real estate transaction. Not only should agents recommend that buyers obtain one, they should make every effort to see to it that the inspector is really good at what he or she does. After all, you’d rather have the inspector tell you about a defect or problem, than to hear about it, after closing, from the buyer’s lawyer.

Market Commentary for the Week of August 4th

This week is very light in terms of the number of economic reports that are scheduled for release that may influence mortgage rates. There are three monthly or quarterly reports set to be posted, but none are considered to be highly important to the markets. We saw rates make a nice move lower Friday after a rough middle part of the week, leaving rates nearly unchanged from last Monday’s opening levels. This week should be much calmer for the mortgage market with fewer intra-day revisions than last week unless something very much unexpected happens.

June’s Factory Orders data is the first data of the week at 10:00 AM ET Tuesday. This report helps us measure manufacturing sector strength by tracking orders for both durable and non-durable goods during the month of June. It is similar to the Durable Goods Orders report that tracks orders for big-ticket items only, which was posted late last month. Since a significant portion of the data was released then, this report likely will not have much of an impact on the markets. Analysts are expecting to see an increase in new orders of approximately 0.5%. A smaller than expected increase would be considered good news for bonds and mortgage pricing, but I don’t believe this report will have a significant impact on Tuesday’s mortgage rates either way.

The Institute for Supply Management (ISM) will post their Services Index for July late Tuesday morning also. This index is somewhat similar to last Friday’s ISM Manufacturing Index but tracks sentiment at the services level rather than manufacturing. It has the potential to impact bond trading and mortgage rates if it shows a sizable variance from forecasts, particularly when little other data is being posted. However, it usually has little influence on mortgage pricing and cannot be considered a key report. Current forecasts are calling for a reading of 56.5, up from June’s reading of 56.0.

Employee Productivity and Costs data for the second quarter will conclude this week’s monthly and quarterly report schedule early Friday morning. It will give us an indication of employee output per hour. High levels of productivity are believed to allow the economy to grow without fears of inflation. I don’t see this being a big mover of mortgage rates either, but it may influence rates slightly during morning trading. Analysts have predicted a 1.4% increase in productivity during the second quarter and a 2.0% decline in labor costs. A larger increase in the productivity reading and a smaller than expected rise in costs could help improve bonds, contributing to slightly lower mortgage rates Friday.

Overall, any day of the week could end up being the most active with such little on the calendar. Tuesday has two reports so we can label it as the best candidate, although a sizable move in stocks could cause a larger move in rates than these reports are likely to do. I am not expecting to see nearly as much volatility in rates this week as we saw last week, but there still is a decent chance of seeing rates move multiple days. Therefore, please maintain contact with your mortgage professional if still floating an interest rate.