Dennis' Mortgage Blog

Delayed due to technical issues at hotel on Friday.

Question of the week:  What brings value to your home?

Answer:  The monetary value of your property and house is determined by the market and the prices paid on homes that have recently sold in your neighborhood.  But that is but part of the value in our home.

The Thanksgiving meals at our dining room table with family and friends add value.

The Christmas mornings sitting on the floor in our pajamas sipping coffee while the kids see what Santa dropped down the chimney add value.

Having a beer with some friends around the barbecue while our kids play in the pool adds value.

Walking across the street after coming home from work and talking to our neighbors for ten minutes adds value.

Cooking dinner with a glass (bottle?) of wine in our kitchen with Leslie adds value.

Looking at the latest homemade decoration put up in one of the kids’ rooms adds value.

Hosting an annual party with friends, family, neighbors coming over to share not necessarily in the joy of friendships and relationships and what they bring to each of us adds value.

A house has value on the market, a home has value in memories, relationships, births and deaths that occur in our lives.  Life has many riches, those created by others that we carry in our hearts and memories are the most valuable of all, those created in our own homes seem to have the most lasting joy as they are recalled.

What is the true value of your home?

I will keep this link on my “Question of the Week” section to assist new homeowners:

IRS Form 5405 for First Time Buyer Tax Credit for those eligible for the up to $8000 credit. Note credit only for those who close escrow before November 30, 2009 under current legislation.

Have a question for me?  Ask me!   

Time is running out on the IRS tax credit!  If you are considering purchasing a home this year, are qualified and wish to take advantage of the IRS credit hurry and get into escrow.  All escrows must be closed by the end of business on November 30, 2009.  Are you qualified?  Click this link IRS Form 5405 for Frequently Asked Questions click here IRS FAQ

Mortgage Backed Securities have had a pretty good week.  They are giving back some ground today on light trading as the markets slowly shut down and traders head out of town for the 3 day weekend.  Overall we experienced another week of positive and some negative news about the economy but investors, including the Fed, kept bonds going with lots of purchases.

One reason is stocks lost.  The stock markets saw four losing days in a row starting last Friday.  Stocks sell bonds buy is the general rule of thumb and this past week saw that occur.  Several days the stock markets started positive only to turn negative later in the day, and the reverse for MBS starting negative and then turning positive. 

As a result of the mid-day reversals mortgage rates, set in the morning and changed mid-day only if significant change in prices—usually for the worse—followed the previous day’s market.  In essence rates this week have had a lag from the day before’s trading.

Looking forward it appears that mortgage backs may be overbought and due for a correction soon.  If investors feel the Fed purchase program is going to be slowing down sooner rather than later we could see the correction sooner rather than later.  In the meantime simple day to day profit taking could put us in position for a drop in prices, and bump in rates, next week.  “Could” being the key word in any discussion on economics.

Labor statistics today showed another 215,000 jobs lost, which is better than the expectation of 230,000—unless you were one of those pink slipped.  This brings the national unemployment rate to 9.7%.  “True” unemployment is probably 3-4% higher if you include those who are significantly under-employed, working part-time but want full time work or have given up looking for work.  Also not included are self-employed individuals who are essentially unemployed due to lack of business.

Those who have been on my updates and read them this past year know that I was against the stimulus package passed by Congress in February after being rushed through.  It’s stated intention was to reduce unemployment and create jobs.  Among my several reservations my primary objection was that the bill would not have any funds hitting the economy until late 2009, essentially in the next month when some of the funds hit and the bulk of the funding will not occur until much later in 2010.  Coincidentally the bulk of the funds get spent when House Representatives and about one-third of the Senate are up for re-election.  Nothing says “vote for me” like a couple of million dollars of pork spending from Washington hits the District. 

The silver lining in the Labor Department reports lately show, to me, that my misgivings on the $787 billion spending package, were and are on the mark.  Unemployment is still growing, but at a slower rate.  Further, in the numbers are average wages and salaries are increasing.  Employers are doing what they always do when business picks up: they are paying more overtime and putting more work on their current employees before making the big commitment to hire more. 

The economy is slowing turning around and it has little to nothing to do with anything done in Washington this year but rather the markets doing what markets naturally do—expanding and contracting and expanding.  The turn around will be slow and our recovery will be very slow compared to last recoveries and growth economies, such as the post-9/11 economic cycle.

Friday Flip Day  Stocks are zooming and mortgage backs are tanking as I write this at 10:00 Pacific.  Yesterday’s gains, and most of Thursday’s are gone.  This shows the importance of taking the best rate you can on the day it is available, waiting for something better in this market usually has you missing a dip.

Rates for Friday September 4th:

FIXED RATE MORTGAGES AT COST OF 1 POINT*

30 year conventional  4.875%                           Unchanged

30 year conforming-jumbo 5.25%                     Down 0.125%

30 year FHA    5.00%                                      Unchanged

30 year FHA jumbo 5.25%                              Down 0.125%

Remember we have true, honest to goodness quality Jumbo rates again! Call for quotes as they vary depending on LTV, FICO and loan amount.

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, and period rate is locked (i.e 45 days instead of 30 days).

NO CHART DUE TO TECHNICAL ISSUES

Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment and a minimum FICO score of 740; APR is not quoted as it is dependent upon specific loan amounts, lenders and services selected.  Numbers provided are for comparative purposes only.

How great is family?  My big brother and his wife have agreed to take the girls and the dog for the weekend.  How great are neighbors? Our great neighbors the Irwins have agreed to watch the house and make sure the pool water stays the right temperature over the weekend.  How great is it to be able to get away for a weekend with your wife and relax without any worries?  Really, really great!

Enjoy the last official weekend of summer! Back to school next week.    

Have a great weekend,

Dennis

Remember this update is posted weekly on My Blog at www.DennisCSmith.com ; feel free to forward the link to family and friends who may be interested in past commentaries.

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