Mortgage financier Fannie Mae is toughening its mortgage application decision-making process effective Monday, June 2, 2008.
The new guidelines will force many Americans to face higher mortgage rates, higher loan fees, or to be shut out from “prime” mortgage rates altogether.
The new “mortgage rules” include the following changes:
Higher income levels required for basic approvals
Interest only loans are now considered high-risk
Condos are now considered high-risk
60-day mortgage lates within 6 months are a major red flag
Not all of the changes are for the worse, though.
In the new guidelines, self-employed borrowers will no longer be viewed as more risky than a W-2 employee. This will help small business owners and commission salespeople get more mortgage approvals than in the past.
Fannie Mae agreed to honor all mortgage approvals granted prior to its changes, so if you’ve been putting off that pre-approval, consider talking to your loan officer before the weekend starts.
Your mortgage approval will be much more lenient today than if you wait until Monday.
The monthly S&P/Case-Shiller Housing Price Index is a popular and often-quoted measurement of the housing market’s health. The chart above is sourced from its report published yesterday.
In 18 of the 20 largest metropolitan areas, home values declined at a slower pace than in the previously measured month. The report also showed that national home prices are down 14.4 percent from March 2007. The Washington metropolitan area was on the list for areas that have improved. While 0.2% isn’t a dramatic change, it’s still good news.
Unfortunately, it’s the more sensation “14.4″ figure that newspapers chose to report this morning. If you never went further than the headline, you’d miss a key piece of analysis.
Comparing today’s market to last year’s market is a lot less valuable than comparing it to last month’s market. That’s a better way to analyze the market’s health.
If we look beyond the headline and examine the data behind it, we see that housing may still be sagging in some areas, but it’s not sagging nearly as much as it used to.
At 32 million acres, homeowner lawns are the most irrigated crop in the United States.
That’s more acreage than the state of Pennsylvania.
Water is not free, however, and the 7 billion gallons deposited on lawns each day comes at a high cost to homeowners and to the environment.
Installing a basic rain monitoring device is one inexpensive way to save money and reduce water use. The Vigoro Rain Monitor, for example, costs $15 at Home Depot and attaches to an electronic sprinkler system.
The Vigoro Rain Monitor collects rainfall in its reservoir and when a half-inch of rain has collected, the monitor seals the path between the water source and the sprinkler heads, thereby preventing unnecessary watering and wasted money.
Many lawn care experts recommend 1 inch of water per week.
The process of buying a home is very different from the process of selling a home, but they both end the same way — with Moving Day.
Choosing a moving company is the often-hurried “last step” that buyers and seller view as a hassle.
Because it’s difficult to differentiate between the moving companies, they look for the lowest-cost provider or a “guy” who can do the job.
If it was that simple, sites like MovingScam.com wouldn’t exist and the New York Times wouldn’t run headlines with the phrase “Furniture Ransom“.
There are a lot of reputable moving companies but there are a lot of con artists, too, and it’s sometimes hard to tell them apart.
This is one reason to ask your real estate agent for a direct referral to a mover; many brokerages have relationships with larger, national companies that can service your in-state and out-of-state moving needs. These movers will come to your home, give an accurate quote, and then stand behind their estimates.
Now, versus the smaller players, the estimates may look a little bit high, but know that they’re legitimate. Don’t think of the higher costs as dollar’s wasted — think of them as piece of mind while your life’s treasures are in transit.
Loan-to-value is a math formula that represents the relationship between how much a home is “worth” and how much money is borrowed against it.
Loan-to-value is often abbreviated as “LTV” and is one of the many factors that lenders consider when underwriting a mortgage application.
The math formula is straightforward:
In the LTV equation, Loan Size is the amount of money borrowed from the bank and Home Value is the lower of the home’s purchase price or appraised value.
Home loans with low loan-to-value ratios are usually less risky for banks. This is one reason why mortgage rates tend to be more favorable for home buyers and homeowners when their respective LTVs are low.
Typically, a “low” LTV loan is one in which the loan-to-value is 80 percent or less. In some instances, however, 70 percent is considered “low”. The cut-off point depends on the mortgage lender and the mortgage product.
On a home purchase, the one way to lower LTV is to make a larger downpayment, thereby reducing the LTV equation’s numerator. Buying a home for below-market value would not reduce LTV, for example, because the purchase price would be used as the equation’s denominator.
On a home loan refinance, the denominator is always the home’s appraised value.
Sometimes, turning electronics off doesn’t really turn them “off”.
Because of clocks, battery chargers, and other LED displays, devices in Standby Mode slowly suck energy from the national power grid and have earned the nickname “Energy Vampires”.
Some examples of standby energy include:
Clock displays on home applicances
Computers in Hibernation Mode
Battery rechargers
Communication between base units and portable units on phones
There is even a growing business around identifying energy loss in a home. P3 International, for example, touts it’s Kill-A-Watt product as a way to “find out what applicances are actually worth keeping plugged in”.
The U.S. Department of Energy estimates that Energy Vampires sucked $4 billion of energy from U.S. homes last year.
It’s not often that a mainstream media publication taunts renters into buying homes, but that’s exactly what Smart Money magazine tries to do in its latest issue.
The Smart Money Web site “lead-in” reads 5 (Lame) Excuses for Not Buying a Home. The title is a little forceful for my taste … and apparently a lot of other people agreed. It looks like they changed the title afterward to something a little more palatable - “Why Buying a Home Is the Best Option.”
The article raises very good counter-points to the more popular reasons why renters avoid homeownership.
Owning a home is a serious responsibility and does require commitment. However, a renter should not feel bullied or hurried into buying because for as much as personal economics are at play, personal emotions are at play, too. Both deserve respect.
So, renters: Put your blinders on and give the Smart Money article a read. There’s good advice in there once you get past the author’s bias.
Retail Sales measures total receipts at stores that sell tangible “things” and — aside from weak demand for automobiles and automobile parts — Retail Sales displayed surprising strength in April.
So much strength, in fact, that many experts are changing their predictions about the U.S. economy’s fate.
Several months ago, most pundits declared that a economic recession was all but inevitable. Today, a growing number are changing their views.
Not only are stock and credit markets improving, but data such as April’s Retail Sales figures suggest that their fears were overblown.
The takeaway from a story like this is that “experts” do a much better job of interpreting the past than predicting the future. A person can make an educated guess, but it’s impossible to know what the future holds for the economy, or for housing, or for mortgage rates.
Even when the outcome is “inevitable”.
Source Recession? Not So Fast, Say Some Kelly Evans And Justin Lahart May 14, 2008, The Wall Street Journal Online http://online.wsj.com/article/SB121068163716188223.html
Season after season, dirt and moss collect and gather on your home’s exterior, rendering your home less attractive to your neighbors and less appealing to would-be home buyers. The best (and fastest) way to restore your home’s original appearance is with the careful use of a pressure washer. A pressure washer is a machine that compresses water from a garden hose into a highly focused stream. The force of the water cuts through grime instantly, rejuvenating your home and restoring its beauty. Pressure washers are available for purchase or for rent at Home Depot and other hardware stores.
When the everyday “Cost of Living” increases, our dollars don’t go as far as they used to. Economists call this inflation.
One popular method of measuring inflation is to track prices for 84,000 individual items and lump them together into a “basket”. If the overall price is higher, then the economy is experiencing inflation.
If a picture is worth a thousand words, this one from The New York Times is worth at least 84,000.
Broken down item-by-item, life is more expensive in some places you expected, and some places you didn’t. For example, over the past year:
Gasoline: +26%
Milk: +13.3%
Children’s Shoes: +4.6%
Pet Supplies: +6.8%
Inflation can be especially damaging to both active home buyers and homeowners looking to refinance because inflation is linked to high mortgage rates.
This is one reason why mortgage rates have fallen since the Federal Reserve’s hints last week that its rate-cutting cycle may be over; many believed that additional Fed Funds Rate cuts would stoke inflation later this year.
In the absence of inflation, mortgage rates tend to improve (all things equal).
Mortgage financier Fannie Mae is toughening its mortgage application decision-making process effective Monday, June 2, 2008.
At 32 million acres, homeowner lawns are the most irrigated crop in the United States. 
The process of buying a home is very different from the process of selling a home, but they both end the same way — with Moving Day.
Loan-to-value is a math formula that represents the relationship between how much a home is “worth” and how much money is borrowed against it.
Sometimes, turning electronics off doesn’t really turn them “off”.
It’s not often that a mainstream media publication taunts renters into buying homes, but that’s exactly what Smart Money magazine tries to do in its latest issue.
Retail Sales measures total receipts at stores that sell tangible “things” and — aside from weak demand for automobiles and automobile parts — Retail Sales displayed surprising strength in April. 
