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What’s Ahead For Mortgage Rates : Week Of June 4, 2012

June 4, 2012 by Jeff Cost

Unemployment Rate Mortgage markets improved last week in response to ongoing concerns for the European Union and an across-the-board weakening in U.S. economic data — including the much-watched jobs report.

Conforming mortgage rates in Kentucky eased lower last week, falling to a new all-time low for 6th week in a row. The moves have been modest, however, falling just 15 basis points during that period.

Back then, Freddie Mac reported the average 30-year fixed rate mortgage to be 3.90% for borrowers willing to pay 0.8 discount points plus a full set a closing costs.

Today, it reports a rate of 3.75% with 0.7 discount points plus closing costs.

The total savings today as compared to April 19 is $8 per month plus $100 in discount points per $100,000 borrowed. This is not a huge monthly discount, but it still lowers a monthly payment. Home affordability remains at its highest point in recorded history.

Mortgage rates may move lower still.

Last week, there was little improvement in the Eurozone with respect to Greece and its future as a member of the European Union. In addition, Spain and Italy saw their respective borrowing costs rise sharply.

Also, Spain is in the process of natiionalizing one of its largest lenders and investors fear the Spain’s government will soon seek financial assistance.

The uncertainty for the future of Europe’s economic union has been driving demand for the relatively-safe U.S. mortgage bond asset class, a pattern known in trading circles as “safe haven” buying. The added demand pushes bond prices up, and bond yields (and mortgage rates) down.

The weaker-than-expected May jobs report also contributed to last week’s falling rates. Job growth is tied to the economy and when job growth is soft, investors are less willing to take risks in the equity markets. Here, again, bond markets benefit and mortgage rates fall.

This week, there is little economic data set for release so expect mortgage markets to take their cues for political and economic news from abroad. With mortgage rates low, though, the timing may be right for a rate lock.

Insurance Policies : Which Do You Need, Which Should You Skip?

June 1, 2012 by Jeff Cost

Insurance is protection against unexpected expenses and insurance policies are available for nearly any scenario you can envision — even your own ransom. But just because an insurance policy is available, that doesn’t mean you should buy it.

Some insurance policies give you good bang for the buck. Others are plain wasteful.

In this 3-minute segment from NBC’s The Today Show, you’ll hear of several common insurance policies and their relative merits to people of Ohio who purchase them.

For example, Americans will spend an estimated $450 million on pet insurance this year. Because of the policies’ restrictions and deductibles, though, it’s an insurance policy that rarely pays off. This is one reason why financial experts often recommend that you pass on purchasing pet insurance.

Within the segment, other reviewed insurance policies include :

Mobile phone insurance
Flight and travel insurance
Extended warranties for electronics
Umbrella policies
Renters insurance

There’s also discussion about home warranties, and why you should avoid policies that last longer than one year.

Insurance should be an important part of your overall financial plan. However, the key is to have the proper policies in place, with an appropriate amount of coverage. Review your policies annually and keep your coverage current.

Pending Home Sales Slip In May

May 31, 2012 by Jeff Cost

Pending Home Sales Index The housing market took a breather in April.

After forging past its benchmark value of 100 in March, April’s Pending Home Sales Index dropped back to 95.5, its lowest reading of the year. The data suggests fewer home resales throughout Kentucky and nationwide in the months ahead.

A “pending home” is a home under contract to sell, but not yet closed. The Pending Home Sales Index is tracked and published monthly by the National Association of REALTORS®.

As a housing market indicator, the Pending Home Sales Index is fundamentally different from other housing metrics which often make headline news.

Unlike the Existing Home Sales report, for example; or the New Home Sales report, the Pending Home Sales Index is purported to be predictor of future housing market performance. It measures the number of homes newly under contract in a given month and, because we know that 80% of homes under contract close within 60 days, the Pending Home Sales Index can foreshadow what’s next for housing.

Other housing market metrics report on events which have already occurred.

Based on April Pending Home Sales Index, therefore, buyers and sellers should expect to see a pull-back in closed home sales through May and June. However, like everything in real estate, home sales remain a local market.

Even by region, performance varied :

Northeast Region : +0.9% from March 2012
Midwest Region : -0.3% from March 2012
South Region : -6.8% from March 2012
West Region : -12.0% from March 2012

Despite three regions posting losses, it’s worth noting that, on an annual basis, all four regions showed gains, led by the Midwest at 23 percent.

If you’re shopping for homes right now, the Pending Home Sales Index suggests that the current market may be “soft”, a scenario which can create ideal home-buying conditions. With mortgage rates low, home affordability has never been higher.

What’s Ahead For Mortgage Rates : Week Of June 4, 2012

Insurance Policies : Which Do You Need, Which Should You Skip?

Pending Home Sales Slip In May

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