Market Commentary for the Week of September 28th

 

This week brings us the release of six monthly economic reports that are likely to influence mortgage rates with two of them being extremely important to the financial and mortgage markets. Those upper tier releases can cause significant movement in mortgage rates if they show surprises.
Accordingly, it appears we will have a couple of days with noticeable changes in rates this week but they will likely be the latter days.

The first report is August’s Personal Income and Outlays early Monday morning. It gives us an indication of consumer ability to spend and current spending habits. This is relevant to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. That is negative news for mortgage rates because bonds tend to thrive in weaker economic conditions. It is expected to show an increase of 0.4% in income and a 0.3% increase in spending. If we see weaker than expected readings, the bond market should react positively, leading to lower rates Monday.

September’s Consumer Confidence Index (CCI) is next, late Tuesday morning. This Conference Board index will be posted at 10:00 AM ET and gives us a measurement of consumer willingness to spend. It is expected to show a good-sized decline in confidence from last month’s reading, indicating that consumers were less optimistic about their own financial situations than last month. This means they are less likely to make a large purchase in the near future. That is favorable news for the bond market and mortgage rates because consumer spending fuels economic growth. Analysts are calling for a reading of approximately 96.0, down from August’s 101.5 reading. The smaller the reading, the better the news for the bond market and mortgage rates.

Wednesday’s report that we need to watch is the ADP Employment report for September before the markets open. It has the potential to cause 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 have recently seen reaction to the report, we will 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.

The Institute for Supply Management (ISM) will post their manufacturing index for September at 10:00 AM ET Thursday. This index measures manufacturer sentiment and it can be heavily influential on the markets and mortgage rates. Analysts are expecting to see a decline from August’s 51.1 reading, meaning surveyed manufacturers felt business conditions were a little weaker in September than they were in August. This data is important not only because it measures manufacturer sentiment, but it is also very recent data. Some economic releases track data that are 30-60 days old. But the ISM index is only a few weeks old and usually the first report we see each month. If it reveals a reading below 50.6, meaning sentiment fell short of expectations, we should see the bond market move higher and mortgage rates fall Thursday.

The biggest news of the week will come from the Labor Department, who will post September’s Employment report early Friday morning. This report will reveal the U.S. unemployment rate, number of new payrolls added or lost during the month and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, falling payrolls and a drop in earnings. If this report gives us weaker than expected readings, bond prices should move higher and we should see lower mortgage rates Friday. However, stronger than forecasted readings could cause a sizable spike in mortgage pricing and start another upward trend in rates. Analysts are expecting to see the unemployment rate remain at 5.1%, an increase of 205,000 new jobs from August’s level and a 0.2% increase in earnings.

The Commerce Department will post August’s Factory Orders data at 10:00 AM ET Friday. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but also includes orders for non-durable goods such as food and clothing. It can sometimes impact the bond market enough to change mortgage rates if it varies from forecasts by a wide margin. However, because it follows the monthly Employment report, I suspect the markets will not be focused on this report. Analysts are forecasting a decline of 1.0% in new orders, meaning manufacturing activity slowed in August. This would be good news for the bond market and mortgage pricing.

Overall, I believe we will see a fair amount of volatility in the markets and mortgage rates this week, but the busiest days will probably be the latter part of the week. Labeling Thursday and Friday as the most important days is easy due to the significance of the economic reports scheduled those days. The calmest day for mortgage rates will likely be Tuesday but major moves in the stock markets could lead to movement in rates any day. With such important data and a relatively full calendar, it would be prudent to maintain fairly constant contact with your mortgage professional this week if still floating an interest rate.

Focus On Functionality When Buying Your Home

 

You have to live somewhere. For most of us, the decision seems to be simply functional. We all say we only need food, clothing, and shelter. But the truth is that we also want our homes to function well for our needs and preferences.

Functionality begins with making a good decision, based on your requirements and what you can afford.  Talk to a professional loan officer to find out what you could afford right now. That will help you make plans for when you will be ready to buy a home. Whether you rent or buy, you decide which home to choose based on affordability, availability and functionality.

Renting is a great option for the short term, when you’re building your savings and may have another move or two before settling down to a home of your own. The functions of renting are independence, affordability, and mobility. As your life matures, you may become more interested in homebuying because your ideas of functionality may change.

You may want more room, privacy, and better access to certain amenities, schools, family or work. You may want a different lifestyle that your current neighborhood doesn’t foster. You may want the autonomy to choose and change the style of your home so you can enjoy your surroundings with your own décor. You may want a home that allows you to expand your interests, such as cooking in a larger kitchen, creating art in a studio, or having a large back yard for gardening and entertaining.

As your preferences become more focused and as the needs of your household change, you may find that owning a home is more suitable for your lifestyle. But, affordability has to be part of the function. In most areas, you can buy a home more affordably than renting.

Let’s say that you find a 2400-square foot home for sale or lease. You may be able to rent it for $1.25 per square foot, or $3,000 per month, but you can buy the property for $1.65 per square foot or $400,000. When you finance the same property over 30 years, your payment is closer to $1,900. Add in typical property taxes and hazard insurance, and you’re at about $2,700 per month, making buying the home a better choice for the long term.

You trade the mobility of renting for the opportunity to build equity. When you own a home, it usually takes several years of ownership before you can build enough equity to cover your transaction costs, making owning a home a long-term investment.

Functionality is about how the home itself can serve you. Square footage can indicate if a home is large enough to have the features you want, but you won’t know until you go inside if the floorplan, features and number of beds and baths suit your wish list.

Choosing a home is really about how you want to use the space you have. As the owner, you have the option to leave things as they are or you can add or remove features as you wish, to improve the functionality of your home.

Whether you rent or buy, choosing a home is about getting the most benefit for your money. It should be a decision based on how well the location, space, and design can serve your needs and pocketbook.

Written by Blanche Evans

Focus On Functionality When Buying Your Home

 

You have to live somewhere. For most of us, the decision seems to be simply functional. We all say we only need food, clothing, and shelter. But the truth is that we also want our homes to function well for our needs and preferences.

Functionality begins with making a good decision, based on your requirements and what you can afford.  Talk to a professional loan officer to find out what you could afford right now. That will help you make plans for when you will be ready to buy a home. Whether you rent or buy, you decide which home to choose based on affordability, availability and functionality.

Renting is a great option for the short term, when you’re building your savings and may have another move or two before settling down to a home of your own. The functions of renting are independence, affordability, and mobility. As your life matures, you may become more interested in homebuying because your ideas of functionality may change.

You may want more room, privacy, and better access to certain amenities, schools, family or work. You may want a different lifestyle that your current neighborhood doesn’t foster. You may want the autonomy to choose and change the style of your home so you can enjoy your surroundings with your own décor. You may want a home that allows you to expand your interests, such as cooking in a larger kitchen, creating art in a studio, or having a large back yard for gardening and entertaining.

As your preferences become more focused and as the needs of your household change, you may find that owning a home is more suitable for your lifestyle. But, affordability has to be part of the function. In most areas, you can buy a home more affordably than renting.

Let’s say that you find a 2400-square foot home for sale or lease. You may be able to rent it for $1.25 per square foot, or $3,000 per month, but you can buy the property for $1.65 per square foot or $400,000. When you finance the same property over 30 years, your payment is closer to $1,900. Add in typical property taxes and hazard insurance, and you’re at about $2,700 per month, making buying the home a better choice for the long term.

You trade the mobility of renting for the opportunity to build equity. When you own a home, it usually takes several years of ownership before you can build enough equity to cover your transaction costs, making owning a home a long-term investment.

Functionality is about how the home itself can serve you. Square footage can indicate if a home is large enough to have the features you want, but you won’t know until you go inside if the floorplan, features and number of beds and baths suit your wish list.

Choosing a home is really about how you want to use the space you have. As the owner, you have the option to leave things as they are or you can add or remove features as you wish, to improve the functionality of your home.

Whether you rent or buy, choosing a home is about getting the most benefit for your money. It should be a decision based on how well the location, space, and design can serve your needs and pocketbook.

Written by Blanche Evans

Market Commentary for the Week of September 21st

 

This week brings us the release of five relevant economic reports for the bond market to digest in addition to two potentially influential Treasury auctions. Most of the reports are considered to be of moderate to fairly high importance to the markets, so they do have the potential to affect mortgage rates although I am expecting to see less volatility in the financial and mortgage markets than we saw last week. We will be watching stocks and news from overseas to heavily impact bond trading and mortgage rates this week.

The first report of the week is August’s Existing Home Sales from the National Association of Realtors late Monday morning. This report will give us an indication of housing sector strength by tracking home resales in the U.S. It is expected to show a small decline from July’s sales, indicating the housing sector softened slightly last month. However, this data probably will be neutral towards mortgage pricing unless its results vary greatly from forecasts.

The Treasury will sell 5-year Notes Wednesday and 7-year Notes Thursday. They will tell us if there is an appetite in the markets for medium-term securities. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher, pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of the sales will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading Wednesday and Thursday.

Thursday has two reports scheduled. The first is August’s Durable Goods Orders at 8:30 AM ET, which is the week’s most important report. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Big-ticket products are items that are expected to last three or more years such as electronics and appliances. Analysts are expecting to see a decline in new orders, indicating weakness in the manufacturing sector. A larger decline than the 2.0% that is being forecasted should help boost bond prices and cause mortgage rates to drop Thursday because signs of economic weakness make longer-term securities more appealing to investors. However, an increase in new orders would indicate a stronger than expected manufacturing sector that would likely help push mortgage rates higher. It is worth noting that this data is known to be quite volatile from month-to-month, so a slight or moderate variance may not affect mortgage pricing.

August’s New Home Sales will be released late Thursday morning. The Commerce Department is expected to say that sales of newly constructed homes rose last month, indicating strength in the new home portion of the housing sector also. This report will likely not have a noticeable impact on mortgage rates unless its readings differ greatly from forecasts. This is the week’s least important report in terms of potential impact on mortgage rates, partly because it covers only the small portion of all homes sales that Monday’s Existing Home Sales report does not.

Friday morning has the second revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don’t see this revision having much of an impact on the financial markets or mortgage pricing. The GDP is important because it is the total sum of all goods and services produced within the U.S. and is considered the best measurement of economic activity. It is expected to show that the economy grew at an annual rate of 3.7%, matching last month’s estimate. The lower the number, the better the news it is for mortgage rates.

The second report of the day is the University of Michigan’s revised Index of Consumer Sentiment for September. The preliminary reading that was released earlier this month showed an 85.7 reading. Analysts are expecting to see an upward revision, meaning consumer confidence was stronger than previously thought. Waning confidence is good news for bonds because consumers that are concerned about their own financial and employment situations are less likely to make a large purchase in the near future, limiting economic growth. Therefore, a lower than expected reading would be favorable news for bonds and should help improve mortgage rates.

Overall, I don’t see an obvious choice for key day of the week but Thursday has the single most important data of the five. So, let’s label it as likely to be most active although Friday does have two reports scheduled also. The least important day looks to be Tuesday with nothing of relevance scheduled. I suspect we will see changes in mortgage rates multiple days this week, but in small increments rather than sizable moves.

Buying and Selling a Home at the Same Time

 

Buying and selling a home is very stressful. Doing both at once can be utterly crazy. Sometimes, you don’t have a choice.

Real estate is a business based on supply and demand. If there are only a few houses for sale, buyers have to compete for those available homes, making it a sellers’ market. When hundreds of homes are on the market, house hunters find themselves in stronger bargaining positions relative to sellers, making it a buyers’ market.

Currently here, we are a seller’s market. There are a number of new home divisions being built, and that could change the balance soon.

Start Early

Get your finances in order by checking your credit report and score to ensure there are no surprises. Work with a professional loan officer to get prequalified. And find a reputable real estate agent with experience in sell/buy contingencies.

Also, most people want top dollar for the home they’re selling and the lowest price for the home that they’re buying. It may be worth your while to sell during the height of the real estate season and then buy a few months later.

If that’s not possible, then you will need to be more flexible on the pricing.

Get Packing

You may need to move very quickly once the right offer comes in, so start boxing up stuff you don’t need easy access to. Get rid of all the things you won’t need until you’ve moved into your new home.

This will help make your home show better and starting the packing process now will make it that much easier to move later. Rent a storage space if you need to.

Do The Quick Fixes

Repaint the walls. Repair the fence. Plant some pretty flower bowls. Do whatever will put your current home’s best foot forward.

While many variables can come into play when you’re buying and selling property, assembling a top-notch team of advisers and doing your homework ahead of time can help ensure your real estate transactions go as smoothly as possible.

What Sellers Should Know About Pets and Selling

 

  Buyers and their agents need to feel welcome to look at the property at their leisure without danger or distractions. So while you adore your sweet-tempered pit bull rescue, he could turn territorial, barking and growling at potential homebuyers. And it could cost you the opportunity to sell your home.

Think of buyers as guests and work to make them feel comfortable as they consider your home for purchase. If you have a protective dog or one that isn’t well-trained, drop her off at doggie day care when you know your home is going to be shown. Or call a pet sitter on call who can take your pet for a long walk while your home is being shown.

If you must leave the dog at home, don’t expect real estate professionals to handle your dog. They are not dog trainers and should not be expected to risk a dog bite to show your home to buyers. This is where crate-training can be a huge advantage. At least your dog is secured and more inclined to relax while your home is being shown.

What you should not do is leave your dog loose in the backyard. Not only does the buyer not have access to part of the property, but your dog could bark so much that the din drives the buyer out of the house. Also, don’t leave your dog at the neighbor’s. It’s just as bad if the buyer believes a noisy dog lives next door.

Housecats can also repel buyers. Most homes aren’t designed with a convenient place for the litter box, so cat owners do the best they can. Owners get used to the smells of catboxes and fishy foods, which could be offensive to buyers who don’t have cats.

While buyers aren’t afraid of being cat-attacked, cats can still be startling — they appear silently without warning and they jump on furniture and counters. And if you’ve taught your cat to jump on your shoulders, you can imagine what could happen to an unsuspecting buyer.

Exotic pets can be showing-stoppers, too. Birds are gorgeous, but a puffed-up screeching cockatoo can be intimidating and dangerous. Imagine a buyer bringing small children who can’t resist sticking their fingers in the cage and quickly get rewarded with a nasty bite from a very strong beak.
When you’re selling a home, keep in mind that the first two weeks on the market are crucial. That’s the time you want your home to be pristine and move-in ready. You don’t want any noise, smells or stains that could put buyers off.

Sell your home faster and for more money by making your home as inviting and accessible as possible, so that buyers have no barriers to overcome. Accessibility to your home is just as important as price, condition and location.

Written by Blanche Evans

Market Commentary for the Week of September 14th

 

This week brings us the release of five economic reports that have the potential to affect mortgage rates in addition to a day of FOMC events that are highly relevant. A couple of items on this week’s calendar are considered to be highly important to the financial and mortgage markets, meaning there is a high probability of seeing significant changes to rates this week. This is especially true the middle days since there is nothing of importance set to be posted Monday.

The highly important Retail Sales report will kick off the week’s calendar at 8:30 AM Tuesday. This Commerce Department report will give us a very important measurement of consumer spending that is extremely relevant to the markets because it makes 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 0.2% 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 economic growth.

August’s Industrial Production data will be posted at 9:15 AM ET Tuesday. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important but could help change mortgage rates if there is a significant difference between forecasts and the actual reading. Analysts are expecting to see a 0.2% decline from July’s level of output. A sizable increase could lead to slightly higher mortgage rates, while a weaker than expected figure would indicate a softer than thought manufacturing sector and would be considered good news for bonds and mortgage rates. However, the Retail Sales report will draw much more attention than this report.

Wednesday morning’s only worthwhile news will be August’s Consumer Price Index (CPI) at 8:30AM ET. This report is considered to be a key indicator of inflation at the consumer level of the economy. There are two readings in the report- the overall index and the core data reading that excludes more volatile food and energy prices. Current forecasts show a 0.1% decline in the overall reading and a 0.1% rise in the more important core reading. The weaker the readings, the better the news it is for bonds and mortgage rates because rising inflation makes long-term investments such as mortgage-related bonds less attractive to investors.

Thursday’s only monthly data is August’s Housing Starts at 8:30 AM ET. This report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show a decline in new home construction starts between July and August. I don’t believe this data will have any influence on mortgage rates, partly because of what will follow during afternoon hours.

The week’s biggest events will come Thursday afternoon, starting with the FOMC meeting that may or may not bring an increase in key short-term interest rates. The Fed events start with the 2:00 PM ET adjournment of the FOMC meeting that begins Wednesday along with revisions to the Fed’s economic projections. The general consensus is that Janet Yellen and company will not change key short-term interest rates at this meeting, but there are plenty of market participants that feel a move is coming. This meeting will also be followed by a press conference with Fed Chair Yellen at 2:30 PM ET. All Fed meetings are highly important, but this one is particularly significant for the financial and mortgage markets. I personally believe key rates will be left alone at this meeting, but we should get some direction on when that first move will come. I also believe we will see a great deal of volatility in the markets and mortgage rates Thursday afternoon.

The final report of the week will come from the Conference Board who will post their Leading Economic Indicators (LEI) for August late Friday morning. The moderately important LEI index attempts to measure economic activity over the next three to six months. It is expected to show a 0.2% increase, meaning that it is predicting modest growth in economic activity over the next several months. A larger increase would be considered negative news for bonds and could lead to a small increase in mortgage rates Friday.

Overall, there is little doubt that this is going to be an active week for the financial and mortgage markets. Thursday is the key day due to the FOMC schedule. Monday isn’t too concerning, but Tuesday and Wednesday morning’s data is very important to bonds and Thursday’s afternoon trading could carry into Friday morning also. In other words, expect to see the most movement in mortgage pricing the middle days of the week. I would not be surprised to see a significant move in bond prices and mortgage rates this week, so it is strongly recommended to maintain contact with your mortgage professional if still floating an interest rate and closing any time in the near future.

Preparing Your Home for Sale

 

You’ve made the decision to sell the home you’re currently in. Your next step is to learn a bit more about the selling process. If you haven’t already chosen a real estate agent, meet with at least two or three to see if you have rapport. If you don’t, keep looking. This person needs to be someone you can talk to, and you have to believe they have your best interests in mind. Look for an agent that has specialized knowledge of your neighborhood. They will know how to price and position better.

If you want to sell your home quickly, you will want to look into hiring a professional stager. Additionally, you will want to improve the curb appeal. Your real estate agent may have fresh flowers planted to add color. Yellow apparently evokes a buying emotion which explains why they use so many marigolds. Ensure that you have a gardener come and mow the lawn weekly. You may want someone to come out every day during the Fall when there are leaves all over or the Winter if you get snow.

And do listen to your agent about minor repairs. The low cost will really pay off.

Hire a cleaning company to come in and do a deep clean top to bottom. You don’t want any cobwebs or dust in windowsills. Get your carpets professionally cleaned.

Quick Tips

Depersonalize and declutter

Buyers can’t see past personal stuff. You want buyers to imagine their own pictures on the walls, and they can’t do that if yours are there. Your goal is to get the buyer to think, “I can see myself living here.” So rent a storage unit and get rid of most of the stuff. Also, make sure you clean out your cabinets and medicine cabinets and closets. People love to snoop.

Don’t Use Plug-In Air Fresheners

The oily or waxy smell can be a turn-off to some people. Your best bet is to bake a load of cookies before people visit. Also, if you have pets, you want them to be somewhere else for awhile. If you choose to get your carpets cleaned, spring for the deodorizing as well.

Last Second Lookers

If your agent says that someone wants to come over in 15 minutes, let them even if the house is a bit messy. It’s these type of last minute lookers that turn into impulsive buyers.

Don’t Be Offended By Low Balls

The fact that they made an offer means you may be able to negotiate them up. Let your real estate agent see what they can do.

Read the Contract Carefully

Very successful agents often pass their listing to junior agents and let them use the name. Before you sign a contract, make certain you know who will be working with you and what they will be doing.  By having proper expectations set, you’ll have a better experience.

Some agents put in additional fees ranging from $250 to $1,500 on top of their standard commission.
It’s intended to cover their brokerage’s administrative costs.

All of these fees are negotiable.

Leave Furniture or Agree to Hire A Stager

Empty rooms don’t appear larger. In fact, they may appear smaller because the potential buyer has no sense of scale. And if the potential buyer sees furniture, they can imagine themselves living in the home more easily.

That being said, always keep your counter tops clear of clutter in the kitchen and bathrooms.  If you’re still living there, keep a special place where you can swipe everything into at the last second.

And don’t go overboard with decorating like wine glasses in a tray next to the bed, or fake pies on the counter. That could turn people off.

Three Tips for Moving Day to Save Your Sanity

 

Three Tips for Moving Day to Save Your Sanity
No matter how intensely you prepare for moving day, you may still face problems if you overlook three sanity-defeating challenges. Can you and your partner really think clearly when swamped by distractions, exhaustion, and disorientation?

If the ramped-up activity of moving day represents less pressure than a typical day for you, you’ll probably find your upcoming move-in day a breeze. Most people do not regularly handle logistics and problem solving on so many levels at once, and can become distracted, exhausted, and disoriented by moving day.

This deflated state sets the moving-day stage for putting your foot in your mouth, saying something you’ll regret disclosing, and blowing a fuse over a minor problem. The issue here is that the whole new neighborhood is watching — either from the sidewalk or from behind curtains — so none of this image-marring behavior goes unnoticed.

Adopt these 3 Crucial Sanity-Saving Tips for living happily beyond moving day and you’ll make settling into your new home a great success:

#1: Anticipate Distraction and Prepare to Think Ahead

Distraction is not a physical state, but a mental one. In a car, you can have both hands on the wheel, eyes on the road, cell etc off, and still be distracted while driving. The moving experience represents a huge mental distraction, so that what you say to new neighbors can get you off on the wrong foot in spite of your best intentions. With your head packed full of moving details and your brain in a state of exhaustion from moving out of your last home and preparing to set up your new home, you are not as in charge of your brain and your mouth as usual.

Acknowledge you’ll be distracted and be prepared. Just as celebrities prepare responses for paparazzi, think about what you want to say before the day arrives. If a wildfire of neighborhood curiosity engulfs you, how will you respond to:”What did you pay for the house?” or “Why did you have to move?” When asked personal questions about family and your occupation, a light-handed, but respectful response in “love to tell you more later”-style may be a friendlier response than disjointed descriptions or “not now please” rebuffs. Make politeness your goal for the day even if neighbor behavior tests your resolve.

#2 Fight Exhaustion and Prepare for Energy Plus

The sustained physical and mental stress of moving out of the old home and into the new one, even if you have lots of help, will disrupt your routines. Fast-food and junk food may seem like an easy fix, but your exhausted moving team (including you) needs more substance to be continually refreshed and recharged during the moving process. Expect this and stock up on nutritional supplements, healthy quick foods, bottled water, non-sugar drinks, and fruit, and encourage catnaps whenever feasible. Avoid sugar, caffeine, and alcohol until after the last box is safely inside and the moving truck leaves. Resolve to crash after everything is done not during a crisis.

#3 Counteract Disorientation and Prepare for the Worst

• In even the most cohesive enclaves, there are undercurrents of past grievances, real and imagined, so step carefully. You will not know what sentiments were left behind by the previous owners.
• Many of the new introductions may not stick, so prepare to re-greet. There’s no way you’ll remember who everyone is and who all the kids belong to.
• Don’t expect to have time to search solutions on your phone&emdash;if you can find it! If you’re new to the area, make a list of the phone number and address for the nearest hardware store (with key cutting), grocery store, medical clinic, pharmacy, bank/ATM, and gas station in case an emergency run is required.
• Neighbors usually only want to help, but they can be drains on attention, energy, and good humor. Decide who is doing what during the move, so one partner isn’t trapped entertaining neighbors while the other slaves in fuming silence.
• If you have very private or expensive things that you don’t want the entire neighborhood to see, box or bag these treasures them.
• Decide which typical moving-in problems would be a big deal for you and prepare for the worst, so you’ll achieve the best outcome possible.
• Parking issues regarding the moving truck and helpers’ cars represent another prepare-ahead detail.
• Engage your real estate professional to ensure you’ll receive the right keys and copies when you expect to. Also ask what happens if there is a closing delay and the keys are not available. Who will pay any costs of this delay including issues with the moving truck?

You may be on top of all the hundreds of details involved in moving your family, but a successful move hinges on preparing to head off these three sanity-defeating problems — distractions, exhaustion, and disorientation — before they “move in” on moving day.

Written by PJ Wade

Using Gift Money for Down Payments

 

To take advantage of low interest rates while home prices climb higher and higher, some homebuyers need help accumulating enough money for a down-payment. To satisfy secondary market loan package purchasers such as Fannie Mae and Freddie Mac and insurers like the Federal Housing Authority, lenders have strict rules about where down-payment money originates.

Lenders prefer that borrowers supply their own down-payment funds. It shows they have “skin in the game” and that they are good with money and can meet their financial goals. But thanks to the Great Recession and the slow road back to recovery, many homebuyers are turning to their parents, grandparents and other family or friends for help.

Research in 2015 from loanDepot LLC, found that more parents are planning on helping their Millennial-age kids buy homes. In the last five years, 13 percent of parents pitched in with down payments, covering closing costs, or co-signing the loan but lenders anticipate that fully 17 percent of parents will help their kids.

Because gifts are a gray area, lenders are requiring more documentation for down payment monies.
For example, a parent may provide a few thousand dollars to an adult child to use as a down payment — but is the money a gift or a loan? Lenders may require borrowers and gift-givers to provide a certified down-payment gift letter or to sign an affidavit.

Such affidavits must include:

• The amount of the gift, accompanied by a corresponding cashier’s check
• The name and address of the gift-giver and relationship the gift-giver has to the homebuyer
• The purpose of the gift — to be used only as a down payment on the subject property, complete with the property’s address
• A statement confirming that the gift is not a loan, and does not need to be repaid
• Signatures of the borrower and the gift-giver

Because lenders require a paper trail, allowing parents to simply transfer money into the borrower’s account to mix with the borrower’s funds is discouraged. First, a large deposit raises the borrower’s income and alters the bank statements, possibly allowing a borrower to qualify for a home that in reality is too expensive. And don’t think underwriters won’t find it. One of the first things they do is examine your bank accounts.

If you want to get a conventional loan, Quicken Loans advises the following:

• If you put down 20% or more, it can all be from a gift.
• If you put down less than 20%, part of the money can be a gift; how much varies by loan type.
• You can only use gift money on primary residences and second homes.

For FHA and VA loans, all of your down payment can be gift money. If your credit score is between 580 and 619, at least 3.5% of your down payment must be your own money. You can only use gift money on primary residences.

If you’re planning to use gift money as part or all of your down payment, ask your lender how to meet the appropriate requirements.

Written by Blanche Evans