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Improving Market Index Climbs To 99

September 12, 2012 by Jeff Cost

Improving Market Index September 2009 The number of U.S. housing markets showing “measurable and sustained growth” has increased by 19 this month, according to the National Association of Homebuilders’ Improving Market Index.

The Improving Market Index is a monthly report meant to identify U.S. markets in which economic growth is occurring broadly — not just in terms of home prices.

The IMI’s conclusions are based on three separately-collected data series, each from a different division of the U.S. government and each tied to specific local economic conditions.

In this way, the Improving Market Index gives a better idea of which markets will outperform averages in the months and years ahead.

The three data series incorporated into the Improving Market Index are :

Employment Statistics (from the Bureau of Labor Statistics)
Home Price Growth (from Freddie Mac)
Single-Family Housing Growth (from the Census Bureau)

The National Association of Homebuilders evaluate the reports for each major metropolitan area and then deems a given one “improving” if two conditions are met. First, all three data series must indicate growth in the current month and, second, at least 6 months have passed since each of the data points’ respective “bottoms”.

The IMI ignore short-term spurts, in other words, and attempts to identify those areas showing long-term, sustainable growth. For relocating home buyers, “improving” cities may also offer better long-term employment and income opportunities.

33 states are represented in the September Improving Market Index, as well as the District of Columbia. 31 new areas were added to the list as compared to August and just 12 dropped off.

The newly-added areas include Sacramento, California; Jacksonville, Florida; and Waco, Texas. Cities falling off the list for September include Dover, Delaware.

The complete Improving Markets Index is available for download at the NAHB website. For a better gauge of what’s happening in Cincinnati on a local level, however, talk to a local real estate agent.

Simple Tips To Keep Your FICO High

September 11, 2012 by Jeff Cost

FICO recipe For today’s home buyers and refinancing households, the value of “good credit” has never been higher.

Mortgage approvals hinge on your FICO score, as does your final mortgage pricing.

If you’re shopping for a home in Ohio , therefore, or contemplating a refinance, be aware of how everyday credit behaviors can affect your FICO. Even small events can make a big impact.

Here are some common-sense steps to help improve your credit score.

First, keep a “cushion” on your credit cards.

30 percent of your credit score is linked to “Amount Owed” and a big part of Amount Owed is a raw calculation of (1) What you owe in dollar terms, against (2) How much credit you have at your disposal. The credit bureaus want to see at least 70% of your credit “available”.

If you can keep your cards at least 70% available, your credit scores should improve.

For example, if all of your credit cards give you access to a combined $50,000 and you are using $10,000 of that available credit, you have 80% of your credit available to you and this is “good”.

Raise your balances to $30,000 and this is “bad”.

Second, don’t make major purchases on credit prior to making a mortgage application. This includes opening a store charge card to save 10 percent or more on a washer/dryer set, for example; or for any other appliance or furniture piece.

The reasons why are two-fold. One, store charge cards are often opened with a limit matching your initial charge, rendering them 100% utilized. This is bad for a FICO, as discussed above. And, two, opening a new charge cards has a negative FICO impact anyway.

Charge cards are associated with high default rates.

Third, make all of your monthly payments on time — even the ones in dispute. You may not want to pay that $80 wireless phone bill, for example; the one that you think you owe, but remember that Payment History accounts for 35% of your credit score. Even one late payment — or payment in collection — and your credit score can drop.

It’s often less expensive to pay a bill in dispute than to be relegated to a higher mortgage rate. The payment is dispute is remedied today. The payment on that mortgage rate lasts for 30 years.

What’s Ahead For Mortgage Rates This Week : September 10, 2012

September 10, 2012 by Jeff Cost

FOMC meets this week Mortgage markets worsened slightly in last week’s holiday-shortened week. As expected, Wall Street took its cues from Europe and from the U.S. jobs market, and mortgage rates moved across a wide range.

Home buyers in Louisville and would-be refinancing households were greeted with wildly varying mortgage rates, depending on which day they loan-shopped.

According to Freddie Mac’s weekly mortgage rate survey, 30-year fixed rate mortgage rates averaged 3.55% nationwide last week, with an accompanying 0.7 discount points.

That is, until Thursday’s meeting of the European Central Bank.

The ECB is similar to the Federal Reserve in that, among its primary functions, it provides liquidity to banking systems in times of crisis. Thursday, the European Central Bank intervened with force.

To aid Spain and Italy, the third- and fourth-largest Eurozone economies, the European Central Board launched a bond-buying program meant to reduce speculation that the two nations — and the Euro itself — would fail.

The move calmed investors and sparked a broad equities market rally.

U.S. mortgage rates did not fare so well, however, climbing as much as 0.25% and leaving that “Freddie Mac mortgage rate” in the dust. If you tried to lock a loan Thursday, you may have been greeted with a rate nearing 4.000 percent.

Fortunately, those rising rates were short-lived.

Friday morning, the U.S. Bureau of Labor Statistics released its August Non-Farm Payrolls report and mortgage rates dropped. Far fewer jobs were created in the U.S. than was expected. 96,000 net new jobs were made in July. Wall Street had expected 130,000. This increases the likelihood of new Fed-led stimulus — perhaps as soon as this week.

The Federal Open Market Committee meets for the 6th of eight times this year later this week; a 2-day get-together scheduled for September 12-13. The Fed may announce a new round of market stimulus. If it does, mortgage rates should fall. If it doesn’t, mortgage rates may rise.

Other news affecting potential housing payments this week includes the release of key inflation data Thursday and Friday, and Friday’s Retail Sales data.

Improving Market Index Climbs To 99

Simple Tips To Keep Your FICO High

What’s Ahead For Mortgage Rates This Week : September 10, 2012

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