Author Archives: joeglez

What’s Ahead For Mortgage Rates This Week : October 31, 2011

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Federal Reserve meeting this weekMortgage markets moved across a wide range last week before, ultimately, finishing unchanged. The bailout of Greece both dominated headlines and dictated market direction.

It was a wild ride for rate shoppers.

Early in the week, mortgage rates spiked. Eurozone leaders expressed optimism that a deal for Greece’s solvency would be made, rhetoric to which Wall Street responded selling mortgage bonds.

When markets closed Wednesday, conforming mortgage rates in Pennsylvania were at their highest levels since September.

However, when markets opened Thursday, rates began to reverse lower. Investors deemed the details of the Greece fuzzy, and, once again, sought safety in the U.S. mortgage bond market.

As such, rates fell through Friday afternoon, closing the week precisely where they started.

This week’s market action figures to be similarly busy. In addition to Friday’s release of the October Non-Farm Payrolls data, the Federal Open Market Committee starts a 2-day meeting Tuesday.

It’s the FOMC’s 7th scheduled meeting of the year.

The FOMC is the Federal Reserve’s monetary policy-setting group. It does not set mortgage rates for citizens of Phoenixville , but it can exert an influence. For example, if the FOMC votes to increase the size of its Operation Twist, mortgage rates may respond favorably, causing rates to fall. 

Conversely, if the FOMC scales back the size of its program because of inflationary concerns or otherwise, mortgage rates should rise. 

The Federal Open Market Committee meeting ends at 2:15 PM ET Wednesday and mortgage rates are typically volatile in the hours surrounding the group’s adjournment. If you’re floating a mortgage rate or deciding whether to lock, keep this date and time in mind.

My latest adventure – “how & where to” guide for Salmon Fishing in upstate NY

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The year was 1983 & I was 8 years old. My father decided he was taking me to Pulaski, NY to go Salmon Fishing. Twenty eight years later, we haven’t missed a year. If you’re looking for a manly man’s fishing trip that’s not too far off, this is a great place to start.

WARNING:

  1. These fish are strong! I DO NOT recommend this for a beginner’s trip.
  2. River currents can be strong, the water deep & rocks slippery. Don’t be a “bruto” – Spanish word for a moron who doesn’t use common sense.
  3. Plan your trip in advance. Salmon season is short (mid/late September through October) & it can be challenging to find lodging.
  4. Purchase your gear in advance. Equipment can be is expensive once you’re there. See the bottom of the page for links to stores (Click here to see what I use).
  5. See #2 again & take me seriously. For all you “brutos” out there, you’ve been warned & you will get hurt if you’re careless.

Now for the fun…….

We left King of Prussia at 4 AM (they had to convince me) & 2 pit stops later we’re eating breakfast at Mapleview Family Restaurant in Parish, NY. It’s a long trip so it’s good to know a few good restaurants along the way. If you’re hungry try the “Big Rig” or “Breakfast Blizzard”. (Click here for direction to all stops). Don’t forget to enjoy the foliage on the way up!

With renewed energy we went to see where it all begins at the Salmon River Fish Hatchery. It’s educational & suited for all ages. So don’t be a heathen, take a minute & learn something. Your wife will be proud. Best of all, you’ll see a ton of king salmon (Chinook) & silver salmon (Coho). After seeing all those fish, we were fired up & ready to go!

A few miles off we started fishing at the Orwell Brook. The Orwell is a small stream with deep pools & little to no crowds. Now keep in mind much of the surrounding land is private & you may need to pay to cross their land. Once there, we found the salmon! I decided I was going to play cameraman & angler at the same time. Sorry for the bumpy video but it gives you a good idea of how these fish fight.


After catching our limit (3 per day), we loaded up our fish & made a quick stop at Fat Nancy’s Tackle & Fly Shop (side note, dragging 60 to 70 lbs worth of fish for ½ to 1 mile uphill is NOT easy. Bring your inhaler cupcake). If you forget anything these guys have it all, but expect to pay a premium. Here you can find a guide, lodging, equipment, etc. In case you’re wondering, Fat Nancy is a fish not an obese older woman who owns a tackle shop. Sorry to disappoint you.

 

By 5 pm we’re beat so we head off to check into our cabin at Catfish Creek Campground. If you get a cabin, it’s great. The trailers, not so much BUT, they are cheaper. I prefer to spend a few bucks more for the cabin. We chose CCC because it’s close to a number of fishing holes, the owners are friendly & the salmon/steelhead fishing is outside your doorstep.

 

 

The next few days we drove between fishing holes, caught a ton of fish, shared fish stories & created memories that will last a lifetime. Salmon fishing is the guy’s guy ultimate bonding trip. I have to say thanks to my dad for making the decision 28 years ago to take me fishing.

One thing is for sure, if you go, you won’t regret it. Take your kid too. He’ll love you for it. I know I did. Feel free to shoot me an email for additional tips on where to go & what to do while you’re there.

 

What I use: Links for equipment:

Orvis Chest Waders – Light weight, breathable, comfortable. If you plan on using your waders hard, spend the few extra bucks. If not get a pair from Cabela’s bargain bin.
Cabela’s Ultralight 2 Lug Wading Boots – I walk (sometimes even run chasing fish) with these which is hard to do with heavy boots. Make sure you use the metal studs as the rocks are VERY slippery. You can also just buy corkers (spiked shoe that attaches to boot). Don’t go with just rubber boots unless you like to swim in cold water.
Shimano Stradic CI4 fishing reel – Super light weight which makes it easier on an old injury to my shoulder
PrecisionPak Vulcan Fannypak – I like a fanny pack because it’s small & you have everything you need around your waist. You can also pick one up at Walmart.
Rapala Stainless Steel Fishing Pliers – These are a must. You can cut line, remove hooks, clamp down split shots, etc with these. I clip mine to my belt & have a cord tied to one end in case I drop them. Regular pliers will work too but I use mine for several kinds of fishing.
Costa Del Mar Polarized Fishing Glasses – I like my Costa’s which are lifetime guarantee. If you’re just starting get some a cheap $20 pair. Serious fishermen will drop about $150 to $200 on these.
Utility box – Buy 1 small one for your gear. You’ll only need hooks/flies, split shots (weights) & plastic eggs or sponges.
Crazy eggs or wally wogs – get a few packs as you will lose quite a few
Owner hooks – these hooks are sharp! The sharper the hook, the less fish you’ll lose.
Tin split shots – again buy a few bags of these as you will lose them & they’re cheap.
Salmon fishing rod – personal preference here – I like a 8’6″ to 9″ medium action rod.

Pending Home Sales Index Slips For 4th Straight Month

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Pending Home SalesNationwide, fewer homes are going under contract to sell.

According to the National Association of REALTORS®, the Pending Home Sales Index fell 5 percent last month. September marks the fourth consecutive month in which the index has dropped. 

The Pending Home Sales Index is a monthly index which measures the number of homes under contract to sell, but not yet closed. As such, it’s among the few “forward-looking” housing indicators; a data set meant to predict future home sales. 

80% of homes under contract close within 2 months so, if the September Pending Home Sales Index is to be believed, we should expect home sales to decline through October and November. 

And that’s before we account for cancelled contracts.

Also from the National Association of REALTORS®, we learn that 18 percent of homes under contract failed to close in September. This is double the failure rate from September 2010 and it, too, should drag Existing Home Sales volume lower this fall.

On a seasonally-adjusted, regional basis, the Pending Home Sales Index fell everywhere. 

  • Northeast Region: -4.7% from August
  • Midwest Region : -6.2% from August
  • South Region : -5.5% from August
  • West Region : -2.1% from August

For home buyers and sellers in Phoenixville , though, regional data remains too broad to be useful. Housing markets are local, meaning that each block on each street on each city has its own distinct economy. When 9 states are grouped into a single “region”, it’s neither helpful nor relevant to people making buy/sell decisions.

That said, the Pending Home Sales Index remains important because it’s about housing, and housing is a keystone of the U.S. economic recovery.

The market looks ideal for buyers. Home prices are rising, but slowly; and mortgage rates remain near rock-bottom levels. Home affordability is high and should remain that way for the next few weeks.

If you’re shopping for a home, it’s an excellent time to go under contract.

New Home Inventory Keeps Sinking

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New Home Supply Sep 2010 - 2011Home builders continue to sell homes and work through inventory.

According to data from the Census Bureau, the number of new homes sold in September jumped 6 percent from the month prior, beating analyst expectations. On a seasonally-adjusted, annualized basis, buyers in Pennsylvania and nationwide closed on 313,000 newly-built homes last month.

It’s the highest reading since April and a major reason why the available number of new homes for sale is shrinking. 

As compared to September 2010, there are 19% fewer homes for sale nationwide. At today’s sales pace, the complete new home inventory would be “sold out” in 6.2 months – the quickest sell-out pace since the April 2010 federal home buyer tax credit expiration.

It’s no wonder builder confidence is rising.

After averaging 15 through the first 9 months of the year, homebuilder confidence jumped 4 points for October, carried by low mortgage rates and the expectation for a strong winter/spring selling season.

For buyers in Collegeville , this could be construed as a housing market-shifting signal. As builder confidence rises, it becomes more difficult to negotiate for upgrades and price reductions on a new home. “Great deals” get scarce.

Furthermore, it’s unlikely that mortgage rates will sustain their current, ultra-low levels into 2012. Rising rates lead to higher housing payments on a month-to-month basis. 

If you’re in the market for a newly-built home, in other words, today’s homes may represent your best value of the year.

Detroit Leads All Case-Shiller Cities In Home Price Improvement

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Case-Shiller Annual Changes August 2011

The August 2011 Case-Shiller Index was released this week. On an monthly basis, 10 of 20 tracked markets worsened. On an annual basis, valuation degradation was worse.

Only Detroit and Washington, D.C. posted higher home values in August 2011 as compared to August 2010, rising 2.7% and 0.3%, respectively.

However, the index has been moving in the right direction. Since bottoming out in March of this year, the Case-Shiller Index is up nearly 4 percent.

As home buyers and sellers in Collegeville , though, we have to remember that the Case-Shiller Index is a flawed product; its methodology too narrow to be the final word for housing markets.

The Case-Shiller Index has 3 main flaws.

The first Case-Shiller Index flaw is its relatively small sample size. Although it’s positioned as a national housing index, Case-Shiller data represents just 20 cities nationwide, and they’re not even the 20 most populous U.S. cities. For example, cities like Houston (#4), Philadelphia (#5), San Antonio (#7) and San Jose (#10) are excluded from the Case-Shiller Index findings.

By contrast, Minneapolis (#48) and Tampa (#55) make the list.

A second Case-Shiller Index flaw is the way in which it measures home price changes. The Case-Shiller Index formula ignores all home sales except for “repeat sales” of the same home. New homes don’t count for the Case-Shiller Index. Furthermore, the index ignores condominium and multi-family home sales, too. 

In some cities, condos can account for a large percentage of sales.

And the third Case-Shiller Index flaw is that the data is reported on a 2-month lag. Next week marks the start of November, yet we’re still discussing data from August. A lot can change in two months (and it often does). Today’s market conditions are similar to — but not the same as — market conditions from before Labor Day.

The Case-Shiller Index is far from “real-time”.

As a monthly release, the Case-Shiller Index does more to help people with a long-term view of housing, including politicians and economists, than it does for everyday buyers and sellers who negotiate prices based on current demand and supply.

A real estate agent can tell you which homes have sold in the last 7 days, and at what prices. The Case-Shiller Index cannot.

The Government’s Revamped HARP Program For Underwater Homeowners

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Making Home AffordabieThe Federal Home Finance Agency announced big changes to its Home Affordable Refinance Program Monday. More commonly called HARP, the Home Affordable Refinance Program is meant to give “underwater homeowners” opportunity to refinance.

With average, 30-year fixed rate mortgages still hovering near 4.000 percent, there are more than a million homeowners in Phoenixville and nationwide who stand to benefit from the program overhaul.

To qualify for the re-released HARP program, you must meet 4 basic criteria :

  1. Your existing home loan must be guaranteed by Fannie Mae or Freddie Mac
  2. Your home must be a 1- to 4-unit property
  3. You must have a perfect mortgage payment history going back 6 months
  4. You may not have had more than one 30-day late payment on your mortgage going back 12 months 

Most notable about the new HARP refinance program, though, is that the government is waiving loan-to-value requirements on a HARP loans. Homeowners’ participation in the program  are no longer restricted by their home’s appraised value. In fact, the new HARP doesn’t even require an appraisal, in most instances.

With the new HARP program, underwater mortgages can be refinanced without LTV limit or penalty.

According to the government’s press release, pricing considerations for the new HARP program will be released on or before November 15, 2011; and lenders are expected to be offering the program as of December 1, 2011.

If you think you may be eligible, first confirm that either Fannie Mae or Freddie Mac is backing your loan. Both groups provide a simple, online lookup.

If your loan cannot be located on either of these two sites, your current mortgage is not backed by Fannie Mae or Freddie Mac, and is not HARP-eligible.

The FHFA’s official press release contains an FAQ section. In it, you’ll find minimum qualification standards, as well as information related to condominiums and to mortgage insurance.

The HARP program is meant to help a wide group of homeowners, but each applicant’s situation is unique. For specific HARP questions, be sure to talk with a loan officer. 

Puerto Rico: Zip lining, Tarpon Fishing & a Wedding

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Puerto Rico: Zip lining, Tarpon Fishing & a Wedding

Although Summer was officially over in September, I wasn’t quite ready.  Back pack in hand (if you read previous posts, you’ll notice a theme) Jen & I headed to Puerto Rico. Don’t you love it when you can visit family that lives in a tropical climate?! 🙂

I  like adventure but not necessarily something that’s going to kill me.  We opted for zip lining at Toro Verde Adventure Park in Orocovis, Puerto Rico. The drive was amazing.  Think long winding roads up a mountain into lush vegetation.

Toro Verde Nature Adventure ParkAt Toro Verde, the zip lines in this course range from 800 feet to 2526 feet long. That is almost a ½ mile long! And the view you get at 600 feet off the ground is breath-taking — or maybe your breath will be taken away by being that far off the ground!

We added the “La Bestia” literally translated “The Beast” to our tour.  This zip line is different from all the others. For this one, you are put into a large body harness, and you lay down and get attached to the cables from your back. So you are flying through the air like a bird (or Superman or Ironman). As far as I know, it is the only one of its kind like this in Puerto Rico.

At 4745 feet, it is almost a mile long (one of the longest zip lines in the world) and it is really, really high off the ground (853 feet)! This zip line takes about 2 minutes from end to end, and you are going pretty fast during parts of it — with the wind whipping across your face (hang onto your hats and sunglasses). You have time to really enjoy the scenery. It was really fun, and over way too fast — I could have done that again and again.

Since I love to fish, no trip to the Caribbean would be complete without tarpon.  For the majority of the trip they eluded me however on my last day, 3 hours before my flight left, my persistence paid off.   This little guy jumped at least 4 to 5 feet in the air.

All in all a great trip.  Summer is officially over but now it’s time for some fall fun.  Salmon fishing in upstate New York is next.  I’ll be sure to send some pics.
Sincerely,

Joe
P.S. – Click here for a few more pics!
P.S.S. – For those of you that love the outdoors, I highly recommend Krux shorts & Keen sandals. They’re both WELL worth it.

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USDA Updates – They now charge for the awesomeness!

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In my last post I gave a few tidbits about USDA (Click here if you missed it – Kick butt 100% financing that you’ll probably qualify for). WOW, I didn’t realize so many people would respond. Good Great stuff guys. So here are a few updates….

October 1, 2011 USDA Rural Housing Loan Changes:

USDA Rural Housing has been taxpayer-subsidized for years. Long gone are those days. The Rural housing Program will no longer be dependent on tax payer money (wish we could say the same about the big banks! Can I get an AMEN!!) To stay in business they started charging for the awesomeness of the program (as if you didn’t know that was coming). They now charge mortgage insurance not only upfront but now monthly for the life of the loan. (insert Homer Simpson like “DOH!” right here) Relax Homie, the upfront has gone down & the monthly isn’t bad.

USDA Rural Housing mortgage insurance rates are:

  • For purchases, 2.00% upfront fee paid at closing, based on the loan size – down 1% from 3% total
  • For refinances, 1.00% upfront fee paid at closing, based on the loan size – no change
  • For all loans, 0.30% annual fee, based on the remaining principal balance – this sucks but just think – FHA is 1.15%!

Real life numbers for USDA Rural Housing:

Client Name

Client A
Mortgage Type

USDA
Interest Rate

3.750%
Term in Years

30
Purchase Price

$200,000.00
Mortgage Amount w/o MIP

$200,000.00
Total Mortgage w/MIP

$204,000.00
Proposed Payment

$944.76
Taxes (guesstimate)

$250.00
Mortgage Insurance Premium

$50.00
Homeowner insurance (guestimate)

$50.00
Total payment

$1,294.76

 

Okay so paying mortgage insurance for the life of the loan isn’t cool but before you get your panties in a bunch, let’s bring it back into perspective:

  • FHA charges 1.15% which would be $184 per month (you may insert Homer-like “DOH!” again)
  • 100% financing – this alone is worth it
  • The rates currently are in the high 3% low 4% range
  • It’s 100% financing (yes I said this twice)
  • It’s now only 2% not 3% upfront so it takes a little of the bite out of it
  • You don’t need a 660 credit score
  • Did I mention it’s 100% financing?

For my local clients, check out just a few of the areas that the USDA Rural Housing Programs are available in:
Collegeville, Royersford, Evansburg, Trappe, Limerick, Schwenksville, Skippack, Oaks, Kimberton, Chester Springs, West Pikeland, Mont Clare, Birchrunville, Spring City ALL QUALIFY!!!  (Generous applause please!!!)

So what’s your next step you say? (get ready for a shameless plug for the Joe Gonzalez Team at Meridian Bank)

I’m so glad you asked! Give Joe Gonzalez from Meridian Bank a call. (Did I just reference myself in the 3rd person?) I’ll be happy to help you with your financing needs! J I hope you enjoyed the info!

What’s Ahead For Mortgage Rates This Week : October 24, 2011

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Greece may not get its aidMortgage markets improved last week on worries that Eurozone leaders would decline to send aid to Greece. These concerns overshadowed optimism for the U.S. economy, the result of several strong data points.

Conforming rates across Pennsylvania eased, giving homeowners and rate shoppers yet another chance to nab historically-low mortgage rates. FHA mortgage rates remained low, too.

According to Freddie Mac, the average 30-year fixed rate mortgage rate is now 4.11% with 0.8 discount points. For loans with zero points, expect to pay slightly higher rates. 

Rate-shoppers and home buyers would do well to pay attention.

This week’s may be as good as mortgage rates get. Possibly forever. This is because the market conditions that helped rates stay low — a weak U.S. economy and uncertainty in Europe — are eroding.

The U.S. economy has posted strong jobs, spending, and confidence figures in the past 3 weeks and Eurozone leaders appear closing making a deal that will help Greece avoid a sovereign debt default.

Once markets no longer worry about these two events, rates are expected to surge.

Eurozone leads met all weekend and have chosen Wednesday, October 26, as a likely “decision date” for Greece. If that date holds, and if an agreement can be reached, U.S. mortgage bonds will sell-off and mortgage rates will rise.

The housing sector is set to release important news this week, too.

After last month’s increase in Housing Starts and steady Existing Home Sales report, Wall Street will watch for this week’s New Home Sales, Case-Shiller Index and Pending Home Sales Index. If momentum stays strong for housing, that, too, should pressure mortgage rates higher.

Mortgage rates remain near all-time lows. If you’ve yet to lock your mortgage rate, or are still shopping, consider that rates have more room to rise than to fall. The “safe play” is to execute a lock today.

USDA Rural Housing – kick butt 100% financing that you’ll probably qualify for!

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USDA Rural Housing – kick butt 100% financing that you’ll probably qualify for!

So you’re looking to buy a home, you don’t have a lot of cash to work with & want a low payment. Looks like you better go to Craigslist & see the rental section right?

Not so fast young grasshopper (who doesn’t love David Carradine). Enter USDA Rural Housing..…

Q: What is USDA Rural Housing?
A:
USDA Rural Housing Loans also called a Rural Development Loan, is a government insured home loan offering 100% financing to qualified buyers, allows for all closing costs to be paid for by the seller or financed into the loan (& the crowd goes wild!!). They offer some of the lowest rates of any loan at a fixed interest rate.

Q: What are the requirements for USDA Rural Housing?
A: 3 parts to this answer.

  1. Credit Worthiness: Your thinking, “Ok, I knew there’s a catch!” Relax Danielson. When your credit is reviewed for a USDA Loan the underwriter will be looking for a history of paying your bills on time. Slow pays & credit blemishes may be overlooked if you have established your credit over the past 12 months. A good credit explanation letter goes a long way. If you say “I didn’t pay because I really needed that new Trans Am to pick up a hot chick” well that’s not going to win you any brownie points. “I didn’t pay because I lost my job/got the bubonic plague/had 8 kids like octomom HOWEVER now I’m back to work & everything is hunky dory! Just check X references!” That will generally go much further….unless you still have bubonic plague. If you have open judgments or collections the UW will most likely ask that they be paid in full before you close.
  2. Income: You will need to be able to document your income on a USDA Rural Housing Loan. USDA will generally want to see a two year history of employment or consistent income. “I’m a pizza guy, waiter, Columbian drug lord & can’t get paid under the table” isn’t going to fly. There are exceptions on the two year requirement can be made for applicants such as students. On a USDA Loan Assets are not required for approval, but can help overcome any possible blemishes on credit. Keep in mind you MUST be within the maximum income limits. Click HERE for the USDA Rural Housing Income Eligibility.
  3. Where you Live: In order to qualify for a USDA Rural Housing Loan your home must be in designated USDA rural area. You can check the USDA eligibility of your county. It might will surprise you how many areas qualify! Scroll to the bottom to see some of the areas. I think you’ll be pleasantly surprised!

Q: Is the USDA loan program limited to first-time buyers?
A: No, the USDA Rural Housing Program can be used by first-time buyers and repeat buyers.

Q: What mortgage products are available with a USDA mortgage?
A: The USDA / Rural Housing Program offers 30-year fixed rate mortgages only. There is no 15-year fixed rate mortgage. There are no adjustable-rate mortgages. 30-year fixed only.

Q: I can’t afford closing costs. Can I get a gift for my closing costs?

A: Yes, USDA loans allow gifts from family members and non-family members. You will need a gift letter to accompany your loan application. Your loan officer (that would be me) can give you one.

Q: Can I use the USDA loan program for an investment property or vacation home?

A: No sir, the USDA Rural Housing Program is for primary residences only.

Q: Is there a minimum credit score for the USDA loan program?

A: There is no minimum score, per se, but 640 is generally regarded as a cutoff point. If your FICO is below 640, you should be prepared to explain why your credit score is below 640, and provide documentation. If you are without a credit score, your lender may accept “alternate” tradelines to establish credit history.

This list is NOT meant to be a comprehensive overview of what the USDA allows, but it covers a lot of good ground.

If you want more information, talk to your lender (that would be me J) or reach out to me directly. USDA mortgage rates are low and my office underwrites and funds our USDA loans in-house.

Now here’s the great news for all of my SEI Investments, Vanguard, De Lage Landen, Pfizer clients in & around Montgomery County. The following cities qualify:

Collegeville, Royersford, Evansburg, Trappe, Limerick, Schwenksville, Skippack, Oaks, Kimberton, Chester Springs, West Pikeland, Mont Clare, Birchrunville, Spring City ALL QUALIFY!!! (Generous applause please!!!)

So now that I have your attention, what’s the next step? Give me a call shoot me an email with questions! It’s that simple.