Converting Your Garage to Living Space

 

How many of us really park our cars in our garages? Often, it’s filled with clutter that we should get rid of. The money we make on the clutter could be put towards remodeling the garage into a living space.

There are many creative ideas you could look in to, and most are easily removed if you want the garage back.

One of the most common plans is turning the garage into a home gym. You have a lot of space to put in machines, weights, and mats for stretching.

Some people convert their garage into day care space and run a child care service out of their home. It also allows you to have a separate entrance into the garage that keeps people out of your personal space.
Other ideas:

• Play room
• Arts and crafts room
• Office
• Media room
• Dining room

One of the most interesting uses is turning your garage into an art studio and replace the garage door with glass to let the natural light in. You can see some inspiration here at Yahoo!

It’s important to remember to get permits for any work that you do. Check with your local government to find out how to obtain the necessary permits. Watch this video for more information.


Another fun idea is to turn the garage into a large gourmet kitchen. You can see how they turned a single car garage into a light and airy kitchen in this Yahoo! article. The pictures are inspiring. Since they removed a wall, it wouldn’t be easy to go back to the original if needed and could impact the sale price.

So why wouldn’t you want to get more space with a room that’s already attached to your house?
Unless you remodel the garage from the outside, it will always look like a conversion because the driveway dead ends into it.

You’ll have problems on the interior as he floor will be lower than the rest of the house because it’s just a concrete slab.

Other factors to take into consideration are your climate. If you get a lot of hot or cold weather, you will want to look into insulation if you intend to use the room a lot.

Where you’ll encounter the most difficulty is in determining your home’s value. When you purchased the home, you paid so much per square foot. Only living space was counted, which doesn’t include the garage, porch or patio, even if they are under the roof.

Many people do successfully add to their living space, and some people look for more living area when they’re looking. So do what’s best for your situation.

Angie’s List has this top five tips for a successful garage conversion:

1. Contact a building inspector. You want your new room to meet city codes. Find out if your municipality has regulations for converting a garage into a living space.

2. Insulate. Garages are hot in summer and cold in winter because there’s typically no insulation. Keeping the climate under control often requires adding insulation.

3. Keep it comfortable. Heating and cooling goes hand-in-hand with insulation. Can your HVAC system handle an additional room? You may need to install a separate system.

4. Fix the floors. Most garage floors are built lower than a home’s interior flooring. Unless you want to step down about 15 inches, consider raising the garage floor so it’s level with the rest of the home. In addition, garage floors are often made of concrete, which retains water. Contractors recommend installing a moisture barrier before adding carpet, or using a material such as ceramic tile that won’t succumb to moisture issues.

5. Don’t forget plumbing. If the room doesn’t have access to running water, contact a plumber to install water lines and drains.

source: http://www.homedit.com/

What to Do When Your Identity Is Stolen

 

What if you were sitting down to review your mortgage paperwork, and were given a poor rate because of bad credit?  And you knew you paid everything on time.  You should have a score over 750!  But you don’t because someone stole your identity, opened up a number of credit lines in your name, and never paid.  If you think you should know because they would call, or you’d receive a bill at your address, you’d be mistaken.  They can often use a different address and phone number claiming that you just moved.  And unfortunately, it happens more often than you’d think, especially during the Holiday Season when you’re using credit cards a lot both in person and online.

That’s another reason why it’s important to regularly check your credit report and fix problems right away.

Large companies like Home Depot, Toys R Us, and Kohl’s are often the target of identity thieves.  It’s easy to open up a credit card, and they can buy items like gift cards.  But because the actual amount is usually under $2000, the corporation doesn’t want to spend the time or money to prosecute.  But your credit report shows you in default of $10,000.

So What Do I Do?

If your identity was stolen, you need to report it to your local police.   A crime was committed, and it needs to be reported.  Then you will use that report when you contact the major companies letting them know that a card was opened without your permission.  They will be responsible for closing out the account and removing it from your credit file.  You also need to put an alert on all three credit bureaus that you were a victim of identity theft.  They will lock down your file and work with you and the corporations to remove the false items.

Unfortunately, it doesn’t always end there.  Some companies will open up a line of credit, or will sign someone up for a cell phone without checking the report.  They’ll just note if there is a credit score.  Additionally, the thief might use your information to obtain health care benefits that could come back to you if the bills are unpaid.  So even when you think you have things cleaned up, something new could show up even with a locked credit report.  Therefore, you need to check regularly.
Here are some resources with checklists and links:

• NoLo Press
• FTC (Federal Trade Commission)
• BBB

Maybe your identity wasn’t fully stolen.  But thieves can still draw on your checking or savings or charge against your credit card leaving you with no money and a huge bill.

Can I Prevent This From Happening?

It’s not fool-proof, but there are definitely things you can do to lessen the possibility of having your identity stolen.

1. Lock your credit reports down.  It will cost you about $5-10 depending upon where you live and the fees vary by the reporting agency.  The good news is that it will cut down on the junk mail you get.  Secondly, it will cut down on your impulse purchases because you won’t be able to open up a credit card on the spot.  You will need to plan ahead when you make purchases like a home or an automobile.
2. Shred, Shred, Shred.  Any item that has personal and identifying information should be shredded before you recycle.  This includes your medical statements, credit card statements, bank statements,
3. Change your passwords often.  Don’t have them written down.  This includes your PINs as well.
4. Review your statements carefully when they arrive.  Yes, it’s easy to toss it into the “I’ll get to it later” pile, but the sooner you find something, the easier it is to fix it.
5. Never give your credit card number over the phone to an unsolicited caller.  You may genuinely believe in their cause, but it’s best to have them send you a statement, and you can validate the address before you send it.
6. Avoid writing personal checks to people you don’t know.  They can use all of the routing and banking information to print checks, and then write checks against your account.
7. Ask your credit card companies to stop sending you promotional checks against your account.  Unlike checking accounts, credit card companies don’t keep a signature card, and these are easily used to draw money against your credit card.
8. When purchasing online, make sure you’re buying from a reputable place, and that it’s a secure transaction.  You can verify that by looking up at the URL area and seeing if it tells you that it’s secure, or https.
9. Write “Please Ask for Photo ID” on the back of your credit cards in permanent ink.  Some people recommend putting tape over it to prevent it from being modified.  And then make sure you bring your photo ID with you.  Some people recommend signing, but then the thief can practice your signature and use it for other things.
10. Get your credit reports annually and review them carefully.

We hope you never need to use this blog post!  Have you ever known anyone who was the victim of identity theft?

Three Ways to Invest In a Home and Not Get Hurt

 

Buy low, sell high. That’s the investor’s maxim that never fails. The trick is in knowing when to buy and when to sell. Investing in a home is never as easy or as quick to deliver returns as you may wish. We all want to ride the boom and avoid the crash. Here are three ways to buy a home safely.

Don’t try to time the market

Some homebuyers believe that waiting for prices or interest rates to go lower is the way to buy a home. But there are two things wrong with that approach.

First, what is the market going to do? Unless you have a crystal ball, it’s hard to know. Between 2006 and 2011, home prices fell an annualized 7.7% a year, or 27%, according to Fiserv Case/Shiller. Since 2011 and 2014, they’ve gained back that much and more on an annual basis.

Mortgage interest rates follow the U.S. Treasury yields. A quarter point rise in interest rates will cost you roughly $25 more per month. Lock in an interest rate with your lender and don’t second-guess yourself. You’ll have more peace of mind as well as a stronger negotiating position with the seller.

Buy within your means

Irresponsible lending led to one of the biggest recessions in modern history. Many homeowners lost their homes. You don’t want to join them by buying a home that’s bigger, more luxurious or pricier than you can reasonably afford.

Lenders are facing heavy government penalties for lending to unqualified borrowers, so they’re insisting that lending standards return to historically safe and sustainable parameters.
That means you won’t be able to pay half your income toward housing which was common during the housing boom. Today, you’ll pay approximately no more than a quarter to a third of your gross monthly income for a home.

As your income improves, your home becomes even more affordable, allowing you to meet other life goals, such as adding new members to your family or starting a business of your own.

Buy long term

The longer you own your home, the more equity you build. Equity is the percent of ownership you have in the home. Think of equity as money you’ll get back when it’s time to sell.

To protect your equity, reinvest in your home to keep it in top condition. Then when it’s time to sell, your home will be more appealing to buyers and sell for more money than similar homes that aren’t as updated or attractive.

If you buy a new home every few years, you’ll throw away thousands in moving and closing costs. It’s far better to hold on to your first home for as long as you can. At some point, you can turn it into a rental property that produces income for you.

Choose the best home you can for the money and it will return the favor.

Written by Blanche Evans

Market Commentary for the First Week of Summer

 

This week brings us the release of six economic reports for the markets to digest in addition to two Treasury auctions that have the potential to come into play. The first of this week’s events takes place late Monday morning when the National Association of Realtors posts May’s Existing Home Sales. This report tracks resales of existing homes, giving us a measurement of housing sector strength. It is considered to be moderately important to the markets, but can influence mortgage rates if it shows a sizable difference between forecasts and actual results. Analysts are currently expecting to see an increase in sales, pointing towards a strengthening housing sector. That would be bad news for the bond market and mortgage rates. A weaker housing sector makes overall economic growth more difficult, so a sizable decline would be ideal for the bond market and mortgage shoppers.

Tuesday has two reports scheduled for release, one of which is the most important report of the week. This would be May’s Durable Goods Orders from the Commerce Department early morning, giving us an indication of manufacturing sector strength. It tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as electronics, appliances and airplanes. This data is known to be quite volatile from month to month and is expected to show a decline of 0.5% in new orders from April to May. A large decline would be the ideal scenario for the bond market and would hopefully lead to a decline in mortgage pricing as it would indicate manufacturing sector weakness.

May’s New Home Sales report will also be released Tuesday, but during late morning trading. It helps us measure housing sector strength by tracking sales of newly constructed homes. This report is similar to Monday’s Existing Home Sales report, but covers a much smaller portion of sales than that report does. It is expected to show a small increase in sales, but will likely not have much of an impact on mortgage rates because this data gives such a small snapshot of the housing sector. I believe it will take a large rise in sales or a sizable decline for this data to influence mortgage rates.

Wednesday’s only economic data is the final reading to the 1st Quarter Gross Domestic Product (GDP). The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. However, this particular data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Market participants are looking more towards next month’s release of the current quarter’s initial GDP reading. Last month’s first revision showed a 0.7% annual rate decline in the GDP. That was a larger contraction than many had were expecting to see. Wednesday’s update is expected to show a 0.2% decline, meaning the economy did contract during the quarter but at a slower pace than previously thought. An increase in the GDP would be considered negative for rates as it means stronger economic activity.

May’s Personal Income and Outlays data is scheduled for release Thursday at 8:30 AM ET. This report gives us an indication of consumer ability to spend and current spending activity. They are important because consumer spending makes up over two-thirds of the U.S. economy. If consumer income is rising, they have more money to spend each month. Analysts are expecting to see an increase of 0.5% in income and a 0.7% rise in the spending portion of the report. Smaller increase in both of these readings would be considered good news for the bond market and mortgage rates.

The University of Michigan will close out this week’s data when they update their Index of Consumer Sentiment for May late Friday morning. This index gives us a measurement of consumer willingness to spend. If consumers are more comfortable with their own financial and employment situations, they are more apt to make large purchases in the near future, fueling economic growth. Accordingly, any consumer spending related data has the potential to affect bond trading and mortgage rates. A downward revision would be considered good news for bonds and rates, but forecasts are calling for little change from this month’s preliminary reading of 94.6.

Also worth noting is the fact that the Fed will be selling more debt this week. These sales may influence broader bond trading enough to affect mortgage rates if they show strong or weak investor demand. There are sales every day except Friday but the two most likely to affect rates are Wednesday’s 5-year Note sale and Thursday’s 7-year Note auction. If they are met with a strong demand, we could see bond prices rise during afternoon trading. This could lead to afternoon improvements to mortgage rates also. But, if the sales draw a lackluster interest from investors, mortgage rates may move higher during afternoon trading those days.

Overall, no day stands out as an easy choice for most important. We could see rates change noticeably multiple days this week. The single most important report is Tuesday’s Durable Goods but Thursday’s income and spending data is going to draw quite a bit of attention also. The calmest day will probably be Wednesday unless something unexpected happens. However, we can see the markets get volatile at any time, especially when other factors can take the spotlight such as stock movement and financial issues overseas, particularly with Greece currently. Therefore, please proceed cautiously if still floating an interest rate and closing in the near future.

Father's Day Trivia

This Sunday, we in the U.S. will celebrate Father’s Day. It is the time of the stereotypical tie and barbecue for presents. So let’s dig deeper and see how this holiday was founded and some other cool facts about the day we honor dads.

How It Got Started

Father’s Day was founded in 1910 in Spokane, Washington by Sonora Smart Dodd. It was first held on June 19, 1910 at the local YMCA.  Sonora Dodd was one of six children raised alone by a Civil War veteran in Arkansas. During the Mother’s Day sermon, she stated that there should be a day honoring father’s. She originally wanted to celebrate the day on June 5th which was her father’s birthday, but there wasn’t enough time to prepare, and they pushed it off to the third Sunday.

It did not have much success initially. In the 1920s, Dodd stopped promoting the celebration because she was studying in the Art Institute of Chicago, and it faded into relative obscurity, even in Spokane. In the 1930s Dodd returned to Spokane and started promoting the celebration again, raising awareness at a national level. She had the help of those trade groups that would benefit most from the holiday, for example the manufacturers of ties, tobacco pipes, and any traditional present to fathers. Since 1938 she had the help of the Father’s Day Council, founded by the New York Associated Men’s Wear Retailers to consolidate and systematize the commercial promotion. Americans resisted the holiday during a few decades, perceiving it as just an attempt by merchants to replicate the commercial success of Mother’s Day, and newspapers frequently featured cynical and sarcastic attacks and jokes. But the trade groups did not give up: they kept promoting it and even incorporated the jokes into their adverts, and they eventually succeeded. By the mid 1980s the Father’s Council wrote that “(…) [Father’s Day] has become a ‘Second Christmas’ for all the men’s gift-oriented industries.”

Congress introduced a bill in 1913 but it didn’t pass. Attempts and protests abounded until 1966 when President Lyndon B. Johnson issued the first presidential proclamation honoring fathers, designating the third Sunday in June as Father’s Day. It took six years until the day was made a permanent national holiday when President Richard Nixon signed it into law in 1972.

Recipes to Cook for Dad

Some dads like to cook and others like to have dinner cooked for them. Just make sure you have a tall cool beverage since the weather is starting to heat up.

Here’s some recipes for you to check out (Dads…feel free to print out and leave lying around as big hints):

• Jamie Oliver
• Food Network
• Taste of Home
• Better Homes & Gardens
• Real Simple

Cool Trivia

Father’s Day is the fifth most popular card-sending holiday, with an estimated $100 million in card sales. Husbands, grandfathers, uncles, sons and sons-in-law are honored as well as father.
Roses are the official flower for Father’s Day. A red rose is worn in the lapel if your father is living, a white rose if he is deceased.

Father’s Day is celebrated most places on the third Sunday in June, but not everywhere. In Spain and Portugal, for instance, fathers are honored on St. Joseph’s Day, March 19. In Australia, it’s the first Sunday in September.

Stay-at-home dads are becoming more common in America. These married fathers with children under 15 years old have remained out of the labor force for more than one year primarily so they can care for the family while their wives work outside the home. The dads seem to stay home more with younger children. Preschoolers claim 20 percent of fathers with employed wives who were the primary caregiver for their preschooler. In contrast, only 6 percent of fathers provided the most hours of care for their grade-school-aged child.

So give a big hug on Sunday (or a virtual one) to your dad or someone who’s been like a dad.
And if you are a dad, what was your favorite present?  And what are you hoping to receive this year?

Why Older Homes Rock

 

Why Older Homes Rock

You’re ready to buy a home, but there hasn’t been a new home built in your area in 10 years, leaving you no choice but to buy an older home. You could appreciate older homes more if you know a little about their history and why they were designed the way they were at the time.
You can trace expansions and contractions in the economy easily by home sizes and standard features. In the 1950s, suburbs grew quickly because of new highway systems that allowed homeowners to commute to their jobs. Yards grew larger and homes sprawled on single-story foundations because land was cheap.

Post-war parents gave birth in record numbers to the baby boomers and decorated their homes with space-age Sputnik Formica, luxurious wall-to-wall carpeting, built-in cocktail bars, and furniture-quality black and white TV sets.

In the mid 1970s at the height of the oil embargo, new homes got smaller and closer together. They began to advertise innovations such as “zero-lot-lines” (which is a fancy way of saying land’s too expensive) over traditional homes with front, back and side yards.

Skylights helped get light from above as common townhome walls and lack of side yards in new communities limited natural light. “Great rooms” were introduced as a spacious but smaller square footage alternative to separate living and den areas. And the “Jack and Jill” bath became the norm to provide kids with some privacy while sharing a bathroom.

By the 1980s, the economy was moving from a single wage earner in the household to DINKS — dual income, no kids. As fortunes improved, McMansions grew like mushrooms, featuring third living areas, three-car garages and private en suite baths for every bedroom. Eat-in kitchens joined palatial dining rooms as must-haves for every homeowner.

By the 1990s, a strong movement in favor of natural materials crowned hardwood floors and granite countertops as the new luxury standard. In-home computers became more popular and affordable and the Internet changed reading and information access forever. Recessions were still six month affairs and CEO pay rose to several hundred times that of ordinary workers.

By 2005, McMansions were everywhere, boasting four or more bedrooms, media rooms, master living areas, private studies, flexspaces, island kitchens, mud rooms, and exercise rooms. Then the housing downturn hit, and very little new construction was being built.

Now it takes two incomes just to tread water, but hard-working families don’t want to compromise. They’re conscious of operating costs as well as purchase costs. Energy-efficiency has steadily moved up the ranks of most important considerations for homebuyers. Homes that have been well-maintained, regardless of age, are desirable.

When you look for an older home, consider the advantages.  The neighborhood is established, so what you see is what you get.  An older home might work best for a decorating style you love, like mid-century modern.  You can get the same square footage as a new home for far less cost.  And you can remodel the home to make it your own.

Written by Blanche Evans

Market Commentary for the Week of June 15th

 

This week brings us the release of only four pieces of economic data that are relevant to mortgage rates, but one of them is a key inflation reading that is very important to the bond market. However, the theme of the week will be Fed-related with an FOMC meeting, economic forecasts and a press conference with Fed Chair Janet Yellen.

Unlike most, this Monday does have a piece data set for release. May’s Industrial Production data will be released at 9:15 AM ET Monday, giving us a measurement of manufacturing sector strength. It tracks output at U.S. factories, mines and utilities, but is considered to be only moderately important to mortgage rates. If it reveals that production is rapidly rising, concerns of manufacturing strength may come into play in the bond market and cause selling in bonds. A larger increase than the 0.3% that is expected would indicate the manufacturing sector is stronger than many had thought and would likely push mortgage rates slightly higher. A smaller than forecasted increase or decline would be favorable news for the bond market and mortgage pricing.

May’s Housing Starts will be posted at 8:30 AM ET Tuesday. This data tracks construction starts of new home projects. It is one of the month’s least important reports and likely will not affect mortgage rates unless its results vary greatly from forecasts. It is expected to show that starts of new homes fell last month, indicating softness in the housing sector. That is good news for the bond market and mortgage rates because a weakening housing sector makes broader economic growth less likely. However, this data is not important enough to cause a noticeable change in mortgage rates unless there is a wide variance between forecasts and the actual results.

Wednesday’s only events are Fed related, but there are three of them. The first is the 2:00 PM adjournment of the FOMC meeting that began Tuesday. It is widely expected that Chairman Yellen and company will not change key short-term interest rates at this meeting, but market participants will be watching the post-meeting statement for any hints at when they will make their increase to key short-term interest rates. If there are any surprises, look for an immediate reaction in the financial and mortgage markets.

Also at 2:00 PM ET Wednesday, the Fed will release their updated estimates for future economic growth. They will likely post their predictions on GDP growth, unemployment and inflation. These could be a market mover if they show even minor revisions to any of the key headline economic numbers. The larger the change, the more likely the markets will react. Revisions that point toward slower economic growth would be good news for the bond market and mortgage rates as it would mean the Fed will probably make that rate increase later than sooner.

They will be followed by a press conference hosted by Fed Chairman Yellen at 2:30 PM ET. These press conferences with the media often lead to significant afternoon volatility in the markets and mortgage rates. Any surprises will probably cause a noticeable reaction in the markets. That means there is a high probability of seeing afternoon changes to mortgage rates Wednesday.

May’s Consumer Price Index (CPI) will be posted early Thursday morning. This index gives us a very important measurement of inflationary pressures at the consumer level of the economy. As with last week’s Producer Price Index (PPI), there are two readings that analysts watch. Forecasts are calling for a 0.5% rise in the overall reading and a 0.2% increase in the core data. The core reading is the more important of the two because it excludes more volatile food and energy prices, leaving a more stable measure of inflation. Indexes like this are important to the bond market and mortgage rates because rising inflation makes long-term securities’ future interest payments less valuable to investors. That leads them to be sold at a discount, causing yields and mortgage rates to move higher.
Therefore, we would like to see weaker than expected readings, indicating inflationary pressures are softer than analysts are thinking. The weaker the readings, the better the news it is for mortgage rates.

Also Thursday morning will be the release of May’s Leading Economic Indicators (LEI). The Conference Board, who is a New York-based business research group, will post this data at 10:00 AM ET. It attempts to predict economic activity over the next three to six months. Good news for mortgage rates would be a decline in this index, but it is expected to show a 0.4% increase from April’s reading. This means it is predicting an increase in economic growth over the next several months. Since this report is not considered to be of high importance, I don’t see it causing too much movement in rates regardless if it shows a strong or weak reading.

Overall, Wednesday is easily the best candidate as most active day for mortgage rates, but we will likely also see a fair amount of movement Thursday. We also need to keep an eye on financial events overseas, particularly out of Greece, as they can heavily influence the global markets. Friday looks to be the least important day unless something unexpected happens. For the week, I would be surprised if we did not see plenty of movement in rates, although the biggest moves will probably take place the middle part. Please maintain contact with your mortgage professional if still floating an interest rate as the markets can become extremely volatile at any time.

Improve Your Home Security

Improve Your Home Security

Protecting your home and your family is important. Some people pay for expensive home security systems and pay monthly contracts, but you don’t have to. If you’re looking to spend some time around the house, here are some do-it-yourself home security improvements you might want to make.

Make It Difficult

Most thieves are looking for something easy to grab. Because of this it’s important not to leave valuable items lying around. An unsecured ladder is gold to a thief. Either he’ll steal it, or use it to climb up and force entry through a high window. Make it difficult for an opportunistic thief to steal or use your ladder by securing it with a lockable storage hook, like those sold by Pro-Hook. These can be bolted to your shed or garage.

If you have a shed, you’ll want to secure it as well. A thief can remove hasps and hinges from the door of the shed with a simple screwdriver. Use security screws instead of Phillips or flathead screws. Security screws take a special bit, and it’s unlikely your average thief will be prepared for that.
Lastly, any accessible hinge pins a thief comes across could be his way into your house. By hammering out the pins, the thief can remove your door completely. Foil this plan with security hinges. These hinges have a locking tab that prevents the door from opening if the hinge pin is removed.

Go High-Tech

Korner is a new technology just crowd-funded through Indiegogo.com. The device is a tag which you place at the corner of any doors or windows you think might be used for illegal entry. These tags transmit a signal to a fob that plugs directly into your Internet router. A smartphone app will alert you if someone enters through one of the tagged entrances, and the fob plugged into your home router will alarm. The app will then give you two options, the first is to call the police, the second is to send a message to your trusted network. Your network is a group of people who you decide should be alerted in such an event. This way someone can go check out the house. Korner only takes a matter of minutes to set up.

While Korner is a useful new product, wouldn’t it be nice if thieves never made it through the door in the first place? To deter thieves from even attempting a break-in, consider some security cameras on the exterior of your house. Placing surveillance cameras at strategic access points can not only make sure you know who enters your home and when, but also look intimidating. Many security camera setups can be costly, but Lorex provides a large variety at affordable prices. With Lorex, there is no monthly fee and set up is easy. With the help of instructional videos, you can set up cameras in about five minutes.

Community

The best way to increase home safety is by being part of your community. This doesn’t just mean being friends with the neighbors. Attend events, make yourself known, and contribute to the community in meaningful ways. Have a sit-down meeting with you family to discuss home safety and what to do in case of an event or emergency. Let your family and community help keep each other safe.

Written by Realty Times Staff

Market Commentary for the Week of June 1st

 

There are seven economic reports scheduled for release this week that have the potential to affect mortgage rates. There is relevant data scheduled for every day this week with a couple of those reports considered to be highly important. Therefore, I believe it will be another active week for mortgage rates.

April’s Personal Income and Outlays data is the first at 8:30 AM ET. It gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. Since consumer spending makes up over two-thirds of our economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.3% increase in income and a 0.2% rise in spending. Weaker readings would be considered good news for bonds and mortgage rates.

The Institute for Supply Management’s (ISM) manufacturing index will also be reported today.  This highly important index measures manufacturer sentiment. One reason why it is considered so important is the fact that it is the first piece of economic data posted every month that covers the preceding month. In other words, it is the first look into the previous month’s economic conditions. That differs from many reports that aren’t released until mid or late month. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. Analysts are expecting to see a 51.9 reading in this month’s release, meaning that sentiment rose a little during May. A smaller reading will be good news for the bond market and mortgage shoppers while a larger than expected increase could contribute to higher mortgage rates Monday.

Tuesday’s only release will come from the Commerce Department, who will post April’s Factory Orders data during late morning trading. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn’t expected to cause much of a change in rates this month. Current forecasts are calling for no change from March’s level.

There are two reports worth watching Wednesday. The ADP Employment report is first, set for release before the markets open. It has the potential to cause some movement in the markets if it shows much stronger or weaker numbers than expected. This report tracks changes in private-sector jobs of ADP’s clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a reaction to the report, we should be watching it. Analysts are expecting it to show that 200,000 new payrolls were added. The lower the number of jobs, the better the news it is for mortgage rates.

Wednesday’s other relevant report is the Federal Reserve’s Beige Book, which is named simply after the color of its cover. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we could see mortgage rates revise higher Wednesday afternoon.

The revised 1st Quarter Productivity and Costs data is Thursday’s report. This data measures employee output and employer costs for wages and benefits. It is considered to be a measurement of wage inflation. Many analysts believe that the economy can grow with low inflationary pressures when productivity is high. Last month’s preliminary reading revealed a 1.9% decline in productivity and a 5.0% increase in labor costs. Thursday’s update is predicted to show that productivity fell at a 2.9% annual rate while labor costs rose 5.9%. I don’t think this piece of data will have much of an impact on the bond market or mortgage pricing either unless it varies greatly from expectations, but stronger productivity and weaker labor costs would be favorable for bonds and mortgage rates.

Friday’s sole report is the single most important report that we see each month. The Labor Department will post May’s Employment data early Friday morning, giving us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate stay at 5.4% with approximately 225,000 jobs added to the economy during the month. A higher than expected unemployment rate and a much smaller number than 225,000 would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates Friday. However, stronger than expected numbers should cause a stock rally and a spike in mortgage rates.

Overall, it appears that Friday is the key day of the week with regards to mortgage rate movement. However, Monday or Wednesday could also be active days for mortgage pricing. Tuesday or Thursday will probably be the lightest day unless something totally unexpected happens with stocks. Although, as we have seen many times over the past couple weeks, we don’t necessarily have to have a significant event or economic report released for the bond market and mortgage rates to become volatile. Therefore, it would be prudent to continue to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.