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Simple Real Estate Definitions: Average Days On Market 2008-04-18 07:00:00 In the world of real estate, Days On Market
is the number of days between when a home lists for sale and when it goes under contract.
It is often abbreviated as DOM.
Average
Days on Market is a similar statistic but instead of applying to one home in particular, it applies to all homes in a given neighborhood, ZIP code, or city.
Average DOM is calculated by adding the number of days for which every listed home in an area was available for sale, and then dividing that number by the total number of listings.
In a buyer's market, Average Days On Market is often elevated. This is because homes don't sell as fast as during a seller's market when the Average DOM can be quite low.
For buyers and sellers of real estate, Average Days On Market can be a strong indicator of home p Read more:Definitions
, Estate
, Simple
Basic Credit Scoring Tips For A Better Mortgage Rate 2008-04-17 07:00:00 Credit scoring is becoming more important to mortgage pricing so now would be a terrific time to brush up on your credit education.
If you understand how the system works, after all, you can make it work to your advantage. One terrific place to start your research is at myFICO.com.
Published by credit scoring powerhouse Equifax, myFICO.com give you information right from the source. There are tens of pages of tips and tricks from which everybody can learn.
Here are some basic pointers to get you started:
Use It Or Lose It: If you don't use credit, the credit agencies can't assign you a credit score. Spend $10 monthly on your credit cards and then pay it in full to "get on the grid" and get yourself a score.
30 Is The Magic Number: Holding your credit card balances below 30 pe Read more:Basic
, Mortgage
If History Is An Indicator, Gas Prices Have Another 10 Percent To Rise 2008-04-16 07:00:00
Average gas prices reached an all-time U.S. high Tuesday, touching $3.40 per gallon. San Francisco and Tulsa are the nation's bookends at $3.94 per gallon and $3.11 per gallon, respectively.
But before you wonder if relief is coming to your family budget, remember that "rising gas prices" is a conversation we have every April.
Using data from gasbuddy.com and looking back to 2004, we can see that gas prices tend to rise during the Spring season.
If the pattern holds, we'll should see another 10 percent increase at the pump before gas prices settle back down over the summer and fall months. Read more:Gas Prices
, History
, Indicator
, Percent
, Prices
Amaze Your Friends With IRS Trivia 2008-04-15 07:00:00 Today is Tax Day so here's some IRS-related trivia to share at the water cooler:
Did you know... President Lincoln and Congress enacted the first income tax in 1862 to pay Civil War expenses.
Did you know... The Civil War income tax was repealed in 1872, revived by Congress in 1894, and ruled unconstitutional by the Supreme Court in 1895.
Did you know... In 1913, Wyoming was the deciding vote in the 16th Amendment which gave Congress the authority collect income tax.
Did you know... The first income tax was 1 percent on net personal incomes above $3,000. There was a 6 percent surtax on incomes over $500,000.
Did you know... The first 1040 form was 4 pages long -- including instructions. Today, the instructions ALONE are 92 pages.
Did you know... During World War I, the hi Read more:Amaze
, Friends
, Trivia
Looking Back And Looking Ahead : April 14, 2008 2008-04-14 07:00:00 Through 5 days of see-saw trading, mortgage rates ended last week relatively flat; the downward tick into Friday's close was a boon for home buyers this past weekend.
It may be short-lived, however.
Oil continues to sit near all-time highs and a slew of inflation-related data is crossing the wires this week.
When inflation pressures are high, mortgage rates rise.
The first piece of data is Retail Sales for March and it hits Monday at 8:30 A.M. ET.
Traders pay close attention to Retail Sales because consumer spending accounts for two-thirds of the economy. If sales growth is negative, it's unlikely that Americans will spend the economy out of its weakness.
That should bode well for mortgage rates because a sluggish economy can combat some forms of inflation.
Next, on Read more:April
, Looking Back
Mortgage Lenders Get "Once Bitten, Twice Shy" And Impose New Restrictions 2008-04-11 10:14:00
Getting approved for a conforming home loan is now tougher than before.
Again.
As home loan defaults mount, government-sponsored financier Fannie Mae has imposed new guidelines on what it will lend and to whom, highlighting the need for a strong credit profile and a downpayment.
In other words, Fannie Mae is outright declining mortgage applicants whose credit is weak and whose payment history shows signs of trouble. But, it's not just the "fringe" borrowers that are finding it harder to get a mortgage.
Buyers with strong credit profiles are being hit by new changes, too.
One such change says that owners of second homes must now have a 10 percent equity position in their homes; 15 percent if the property is in a "declining market".
This is up from 5 and 10 percent Read more:Lenders
, Mortgage
, Mortgage Lenders
, Restrictions
, Twice
Are You Financially Smarter Than A 12th Grader? 2008-04-10 07:00:00
Every two years, the Jump$tart Coalition issues a "personal finance" exam to high school seniors.
The test highlights the importance of personal financial literacy among America's youth and comes at an especially important juncture.
Many experts -- including Fed Chairman Ben Bernanke -- believe that basic financial knowledge is essential for (and lacking in) teenagers. Jump$tart's exam did little to disprove this.
This year, 12th graders answered 48.3% correct on average and posted the lowest scores since Jump$tart first issued the test in 1996.
A sample question from the 31-question test:
Which of the following types of investment would best protect the purchasing power of a familys savings in the event of a sudden increase in inflation?
A twenty-five year corporate Read more:Financially
, Grader
What 98 Percent Of Traders Think About The Fed's Next Move 2008-04-09 09:06:25
In three weeks, the Federal Open Market Committee will meet again and markets anticipate another cut to the Fed Funds Rate.
Based on data compiled by the Federal Reserve Bank of Cleveland at the close of business yesterday, traders put the probabilities of the Fed's next move at:
62 percent chance that the Fed Funds Rate falls to 2.000%
36 percent chance that the Fed Funds Rate falls to 1.750%
Currently, the Fed Funds Rate is 2.250%.
Cuts to the Fed Funds Rate are meant to stimulate the economy by lowering borrowing costs for banks, businesses, and consumers. When less money is spent on interest payments, more money is available for goods and services and that tends propels the economy forward.
Cuts to the Fed Funds Rate, however, do not equal cuts to mor Read more:Percent
A Simple Explanation Of "Credit Crunch" 2008-04-08 07:00:00
News sources like to use the term "credit crunch" in describing the U.S. economy, but they rarely define what a credit crunch is and what it means for Americans.
A credit crunch is when the amount of available loans suddenly decreases over a very short period of time.
Usually, it follows a period of lending which, in hindsight, becomes known for its "easy money".
The start of a credit crunch often coincides with consumer loans starting to go bad and lenders losses starting to mount.
The realization that more losses are ahead forces lending institutions to tightening their respective lending guidelines.
Since the current credit crunch began in mid-2007, Americans looking for credit now face:
Higher credit score requirements on auto loan applications
Higher f Read more:Credit Crunch
, Crunch
, Simple
Looking Back And Looking Ahead : April 7, 2008 2008-04-07 07:00:00
Mortgage rates edged lower last week, buoyed by a weak employment report for March.
After shedding 80,000 jobs last month, the number of working Americans is lower by 232,000 so far this year.
Many pundits are claiming these figures are proof of a U.S. economic recession but it's important to keep the data in perspective.
According to the government, there are 153 million people in the workforce.
The 232,000 terminated workers, therefore, represent a fractional 0.15 percent of the workforce. This is a very small percentage.
This week, there isn't much new data for markets to digest but we'll want to keep an eye on some important events.
The first is Monday's Consumer Credit report. As the Federal Reserve has lowered the Fed Funds Rate, Prime Rate ha Read more:April
, Looking Back
How Mortgage Rates Benefit From 3 Months Of Worsening Employment Data 2008-04-04 10:40:28
For the third month in a row, the economy shed jobs, suggesting that the U.S. is in a recession.
March's monthly loss of 80,000 jobs is the largest since March 2003 and follows January and February's losses of 76,000 each.
The weak data is edging mortgage rates lower as we head into the weekend.
The connection between poor jobs data and today's falling mortgage rates is a little bit strained, but worth discussing. It all comes down to expectations.
Prior to today, there was an expectation that the Federal Reserve's recent rate cuts would over-ignite the economy sometime this Summer. The Fed has cut 3 percent from the benchmark rate since September 2007.
Meanwhile, consumer spending makes up two-thirds of the economy and people can't spend if they don't earn.
So, Read more:Months
, Mortgage
, Rates
Good Morning America: TurboTax vs Accountants 2008-04-03 07:00:00
To see which method gives tax filers the "biggest bang for the buck", ABC's Morning
.htm">Good Morning
America
recently compared three popular tax preparation services:
TurboTax
H & R Block
Personal accountant
In declaring TurboTax the "winner", the 4-minute video glossed over several important tax-related items.
The first is that true tax planning cannot happen in a 3-hour stint in front of a computer. Tax planning a year-round activity.
The second is that all personal financial decisions should be evaluated for their tax implications. That can't happen without a personal accountant that knows your tax history and understands your financial goals.
The third is that filing income taxes is a personal event. The "winning" tax preparation method for the family on Read more:Good Morning America
Simple Real Estate Definitions: Discount Points 2008-04-02 07:00:00
More commonly called "points", discount points are up-front fees charged by mortgage lenders in exchange for lower mortgage rates.
The cost of one point is one percent on the loan size and discount points appear on Line 802 of the HUD-1 Settlement Statement.
As a general guideline, each point paid lowers a mortgage lender's offered interest rate by 0.250%.
For example, a $200,000 home loan offered at 6.000% can be had for 5.750% if the borrower agrees to make an up-front payment of one point ($2,000).
In addition to lowering your interest rate, discount points (as well as other closing costs) may be tax-deductible, too. Therefore, be sure to provide any settlement statements from the previous calendar year to your accountant during Tax Season. Read more:Definitions
, Discount
, Estate
, Points
, Simple
FHA Home Loans Emerge As A Cheap Alternative For Low-Credit Score Homeowners 2008-04-01 08:24:16
FHA stands for Federal Housing Administration, a by-product of the National Housing Act of 1934 and now a sub-group within the U.S. Department of Housing and Urban Development (HUD).
The FHA is not a lender nor does it build homes.
The FHA exists to insure lenders against loss in the event that a homeowner defaults on a mortgage.
Mortgages backed by FHA are often called "FHA loans" even though it's somewhat of a misnomer. A more appropriate name would be "FHA-insured" loans because that better describes the FHA's function.
With the FHA's guarantee, mortgage lenders are enticed to make loans on which they would otherwise pass and the explicit backing from the government holds mortgage rates low for borrowers.
FHA loans are often used by borrowers with less-than-2 Read more:Alternative
, Cheap
, Credit Score
, Homeowners
, Loans
, Score
Looking Back And Looking Ahead : March 31, 2008 2008-03-31 07:00:00
Mortgage rates were up last week on weak housing data and a growing nervousness about mortgage bond quality.
Rates would have been up more if not for a tame inflation reading Friday.
The Personal Consumption Expenditures report fell Friday to 2.0% year-over-year, putting it back within the Federal Reserve's comfort zone of 1-2 percent.
PCE is the Fed's preferred inflation gauge and with inflation in check, Ben Bernanke & Co. can focus on other elements of the economy such as housing and employment.
Mortgage rates figure to be volatile (again) this week.
The first major event to strike markets is today's release of a 200-page, government-written plan outlining sweeping reforms for the financial industry.
If markets interpret the government's plan to be bad f Read more:Looking Back
, March
In 2008, Home Loans Are One Day Cheap And The Next Day Expensive 2008-03-28 07:00:00
When mortgage rates change rapidly, it's a fiscal challenge to shop for a home and/or home loan.
Lately, mortgage rates have been especially volatile, mirroring the wild moves of the stock market.
Here's how up-and-down stock markets have been in 2008: Through last week, the S&P 500 Index changed more than 1 percent per day on 28 separate days.
This represents 52 percent of all trading days and is the most volatile measurement since 1938.
Mortgage financing is impacted by stock market changes because when money flows into stocks, it tends to come from bond markets. And, when money leaves stocks, it tends to "gets parked" in bond markets.
Because mortgage bonds set mortgage rates, you can understand how stock market volatility can make it difficult to predict w Read more:Cheap
, Loans
Why "Median Sales Price" Reports Aren't Helpful For Housing Markets 2008-03-27 09:13:00
Each month, the Commerce Department and the National Association of REALTORS release national housing data.
The former's release is called the New Residential Sales
report and the latter's is called the Existing Home Sales report.
Both reports highlight the "median sales price", the point at which half of the homes in the U.S. sold for more, and half sold for less.
Last month, the median sales prices were as follows:
Existing homes: Down 8.2 percent
New homes: Down 2.7 percent
The very definition of "median", however, makes this data point useless for national housing statistics.
If a large amount of homes are sold in regions where home prices are traditionally high, the median sales price will trend higher.
If a large amount of homes are sold in regions where ho Read more:Housing
, Markets
, Median
The Small Statistic Within Consumer Confidence That Didn't Show Up On The News 2008-03-26 07:00:00 ConsumerConfidence
fell to its lowest point in three years and anybody who watches the evening news can understand why.
Each day, news programs barrage Americans with tales of economic woe and American Opinion is largely shaped by the media.
After enough time, the reporting becomes a self-fulfilling prophecy.
But, in the Consumer Confidence report, there was a choice piece of data that isn't getting reported by the news programs and it's a rather important piece.
Although fewer consumers expect to buy automobiles and appliances over the next six months, those with plans to buy homes is actually higher by 14 percent.
In other words, despite weakening confidence in the economy, an increasing number of Americans are planning to buy homes this season and next.
Consumers may be motivated Read more:Small
, Statistic
How Seasonal Factors Change Homeowner Vacancy Rates 2008-03-25 08:50:32
Each quarter, the Census Bureau releases the Homeowner Vacancy Rate, a housing statistic the measures the percentage of homes for sale that are vacant.
A home listed for sale may be vacant for several reasons including:
The home has been foreclosed and the owner has moved out
The home seller moved into a new home and not sold his former home
The home was a rental property and is being sold without a tenant
In Q4 2007, the Homeowner Vacancy Rate matched its all-time high of 2.8 percent.
The statistic can be misleading, however, because Homeowner Vacancy Rates
appear to be seasonal and the fourth quarter is more prone to high figures.
As evidence: In 6 of the last 7 years, Q4 posted higher vacancy rates than for the preceding three quarters.
Vacancy rates may increase in th Read more:Change
Looking Back And Looking Ahead : April 21, 2008 2008-04-21 07:00:00
The S&P 500 added 4.3 percent last week -- more than during all of 2007 -- in what was a good week for the economy and a bad week for mortgage rate shoppers.
After Friday's close, mortgage rates were higher by as much as 0.375% versus the Friday prior. This reversed a trend of falling rates for Americans.
In recent weeks, mortgage rates had been falling as investors fled risky stocks and parked their money in the bond markets.
A trading pattern such as this one is sometimes called "Flight to Quality" and it creates a high demand for all types of bonds. When bond demand is high, bond prices increase and that drives bonds' relative rates of return down.
Over this past week, however, the Flight to Quality unwound.
Investors saw opportunities f Read more:April
, Looking Back
It Doesn't Matter That The Median Home Sale Price Rose In March 2008 2008-04-23 10:14:59 The National Association of REALTORS released its Existing Home Sale
s report for March
2008. An "existing home" is one that is not considered new construction.
A sub-headline in the report showed that the median sales price of all homes sold in March increased by 2.5 percent to $200,700.
But don't assume that the housing market is improving because of a statistic like that because in the field of Statistics, median is just the "middle" in a group of numbers.
With respect to the Existing Home Sales, the median sales price is the price point at which half of all homes sold went for more, and half went for less.
If more homes sell in high-priced San Jose, CA than in low-priced Youngstown, OH, for example, the median will be skewed to the high-side. The reverse is true, too.
Median
Before Co-Signing For A Mortgage, Consider The Deeper Implications 2008-04-22 09:35:00 As mortgage lenders limit how much money they will lend and to whom, co-signing home loans is growing in popularity.
"Co-signing" a home loan is when a third-party -- usually a parent or relative -- promises to make repayments to the bank in the event that the borrower falls behind on his obligations.
Money experts usually advise against co-signing notes because of the long-term financial risks, but people still do it for a number of reasons including "wanting to help".
If you're thinking about co-signing a home loan for a friend or loved one, it's important to consider the implications of sharing credit with another person.
The four questions below may help you with your decision:
Why can't the borrower get approved on his own? It is because of poor credit rat Read more:Implications
, Mortgage
How To Determine When You'll Get Your Tax Rebate 2008-04-24 10:31:00 More than 130 million Americans will receive tax rebates this year as part of Congress' $168 billion economic stimulus package.
Payments begin in about two weeks and range from $600 for individuals to $1,200 for couples, plus an additional $300 per child.
Not everyone is eligible for a full rebate, however.
For single filers earning more than $75,000 and joint filers earning more than $150,000, the tax rebate is reduced by $50 for each $1,000 of income beyond the limits.
An individual with no children, therefore, will not receive a tax rebate if income exceeds $87,000 annually. The IRS provides a tax rebate calculator that can help make sense of the math.
For tax filers using direct deposit, the rebates will be paid based on the last two digits of the social Read more:Rebate
New Home Sales : How The Newspaper Headlines Mislead You 2008-04-25 08:03:00 Newspaper headlines rarely tell the full story and today's papers provide a terrific example.
From the Baltimore Sun (and others):
New-home sales lowest since 19918.5% March decline exceeds forecasts; prices also tumble
As always, there's more to the story than the headline.
The Census Bureau reported a 8.5 percent decline in New HomeSales
last month, but in the "fine print" of the report, the Census Bureau cites a margin of error of 16.1 percent.
By including a margin of error, the Census Bureau is acknowledging that the "headline number" is not precise and that the actual change in New Home Sales
data lies somewhere between the values -24.6% and +7.6%.
Notice that the range of possible reading includes positive numbers.
This means that Read more:Newspaper
Looking Back And Looking Ahead : April 28, 2008 2008-04-28 07:00:00 Mortgage markets lost ground last week on inflation concerns and a general feeling that "the worst may be over" on Wall Street.
As investors moved money into the stock market, mortgage rates ticked higher for the second straight week.
The biggest story from last week was the rising cost of gasoline.
Rising energy costs combined with rising food prices are creating worries about the American consumer's ability to spur the economy forward.
That sets up the biggest story of this week -- the Federal Open Market Committee meeting.
The FOMC starts a 2-day meeting Tuesday and is widely expected to lower the Fed Funds Rate by 0.250 percent at its adjournment.
Cuts to the Fed Funds Rate are meant to promote growth in the economy by decreasing borrowing costs for Read more:April
, Looking Back
The 80/20 Rule Applies To Foreclosures 2008-04-29 09:56:22 RealtyTrac released Q1 2008 foreclosure statistics and the data follows an interesting statistical phenomenon most commonly known as the "80/20 Rule".
The 80/20 Rule states that 80 percent of the effects come from 20 percent of the causes.
In this case, 80 percent of bank repossessions in the first three months of 2008 came from 20 percent of the states in the union.
Accounting for 156,463 repossessed homes nationwide:
California (40,023 homes)
Texas (14,935 homes)
Michigan (12,016 homes)
Ohio (10,299 homes)
Florida (10,185 homes)
Georgia (8,265 homes)
Arizona (7,956 homes)
Colorado (7,022 homes)
Tennessee (4,533 homes)
Indiana (4,446 homes)
Illinois (4,216 homes)
Overall, 0.55 percent of homes were repossessed by banks in the first quarter. Read more:Applies
, Foreclosures
Making English Out Of Fed-Speak (April 2008 Edition) 2008-04-30 17:40:00
The Fed lowered the Fed Funds Rate by a quarter-percent to 2.000% this afternoon.
Because it is tied to the Fed Funds Rate, Prime Rate also fell by a quarter-percent. Prime Rate is now 5.000%.
Holders of home equity lines of credit and credit card debt benefited from the change and will see lower interest costs in next month's statements.
Mortgage rate shoppers are also benefitting.
Each time the Federal Reserve cuts the Fed Funds Rate, it's meant to stimulate the economy in growth. Too much stimulation can create too much growth and that often leads to inflation (which causes mortgage rates to rise).
This is one reason why mortgage rates had not fallen over the past few months. Each Fed Funds Rate cut made it more likely that the econom Read more:April
, Edition
, English
Why It Doesn't Matter What The Federal Reserve Does Today 2008-04-30 09:53:00 The Federal
Open Market Committee adjourns from its two-day meeting at 2:15 P.M. ET today.
Markets expect the Fed to lower the Fed Funds Rate by 0.250 percent in its press release but it's not what the Fed does that matters to economy right now.
It's what the Fed says.
If the Fed states that future rate cuts are needed to stabilize the economy, mortgage rates should rise because rate cuts tend to create inflation. Inflation is the enemy of mortgage rates.
By contrast, if the Fed states that it will "pause" before making additional rate cuts (or hikes), mortgage rates should fall.
We'll dissect the message in full late this afternoon but the most important message to remember is this:
The Federal Reserve
does not directly control mortgage rates.
The Fed only cont Read more:Today
Why Mortgage Rates Aren't Falling Even Though The Economy Is Shedding Jobs 2008-05-02 11:33:00 According to the Bureau of Labor Statistics, the U.S. economy shed 20,000 jobs in April 2008. The labor force now counts at 146 million people as employed.
Normally, a loss of jobs would foretell economic weakness and would be a good thing for mortgage rate shoppers. Today, though, traders had been expecting a larger loss of 70,000 jobs.
In other words, today's jobs report looks surprisingly strong.
The stock market is now rallying on optimism that "the worst is over" for the U.S. economy and evidence supporting the Federal Reserve's remarks that its rate cuts were starting to take hold.
The stock market's gains are the bond market's losses.
Mortgage
rates are up today because the cash that is fueling the stock market is coming from the sale of all types of Read more:Rates
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