Shopping And Paying Bills Online? Here’s Methods To Protect Your Online Financial Identity
In May 2010, Retail Sales at non-store retailers — a category that includes Amazon and eBay — topped $29 billion, up 16 percent from May 2009. Clearly, Americans are doing an increasing amount of shopping online. And we’re paying our bills online, too.
But how well are we protecting our identities?
In this 5-minute piece from NBC’s The Today Show, you’ll learn the basics of online fraud and methods to minimize the likelihood of identity theft. Furthermore, the tips go beyond the basic “choose a challenging password”. For example, you’ll hear about:
- Why you shouldn’t pay bills from a coffee shop
- Who might be hiding behind an unprotected public wifi network
- The dangers of storing credit card numbers with an online retailer
And, although, at one point, the interviewee goes over the top with respect to spyware and anti-phishing prevention, the point being made is a good one — you can’t be too careful with your online financials and common sense goes a long way.
What’s Ahead For Mortgage Rates This Week : June 14, 2010
Mortgage markets posted four good days last week and one awful one. Unfortunately for rate shoppers , that one bad day outweighed the gains of the other four and mortgage rates worsened on the week overall.
Despite re-touching all-time lows on Tuesday and Wednesday, Conforming and FHA mortgage rates moved higher on the week.
There wasn’t much domestic data on which for mortgage markets to move so rates took their cues from global economic activity. Strong data from Japan and China, plus an improving outlook from the Eurozone, sparked optimism among Wall Street investors. Cash poured into the stock market and it happened at the expense of bonds — including the mortgage-backed ones.
It’s the primary reasons rates rose and not even the worst Retail Sales report in 8 months could undue the damage.
Often, weak Retail Sales data causes mortgage rates to fall. Last week, however, that wasn’t the case.
This week, there’s cause for rates to rise again with Wednesday emerging as a “data day”.
First, at 8:30 AM ET, the government releases two key housing statistics and one major gauge for inflation — Housing Starts, Building Permits and Producer Price Index, respectively. Strength in any or all three should lead mortgage rates higher.
Then, at 5:45 PM ET, Fed Chairman Ben Bernanke makes a public speech and anytime Bernanke speaks, mortgage rates can move.
Mortgage rates remain unnaturally low and a lot of Americans have taken advantage already. If you’re a homeowner and you’ve wondered whether or not a refinance makes sense, talk to your loan officer straight away. Low rates like this can’t last forever so lock one in while you can.
FHA Mortgage Insurance Premiums Approved To Triple In Cost
Starting sometime later this year, the monthly cost to carry an FHA-insured mortgage is expected to rise.
In a near-unanimous vote, the House of Representatives gave the FHA power to raise the monthly mortgage insurance premiums it charges to its borrowers.
Currently, monthly mortgage insurance premiums are 0.55% of the unpaid loan balance, divided by 12. The recently approved Federal Housing Administration Reform Act provides for an increase in monthly premium of up to 1.55 percent, among other details of the bill.
Despite the ability to charge 1.55 percent, FHA officials say an increase to 0.90 percent would be sufficient to self-insure its loans.
In everyday terms, assuming a $200,000 mortgage, the math to a homeowner looks as follows:
- Current Premium (0.55%) : $91.67 monthly mortgage insurance premium
- Expected Increase (0.90%) : $150.00 monthly mortgage insurance premium
- Maximum Increase (1.55%) : $258.33 monthly mortgage insurance premium
A increase in monthly mortgage insurance premiums will reduce home affordability and strain household budgets.
The news isn’t all terrible, however.
Because higher monthly insurance premiums are expected to pad the FHA coffers sufficiently, the FHA has said it plans to reduce its upfront mortgage insurance premium paid at closing from 2.25 percent down to 1.000 percent.
On the same $200,000 mortgage, a move like that would reduces closing costs by $2,500.
The bill awaits companion legislation in Senate and final approval into law, but considering the House’s lopsided vote Thursday, it could happen rather quickly. If you’re planning to buy or refinance a home using an FHA mortgage, you may find that waiting to take the next step could be a costly one, long-term.
The FHA insured close to a quarter of all mortgages made in the first three months of 2010.
Bank Reposessions Reach Record Levels For The Second Straight Month
According to foreclosure-tracking firm RealtyTrac.com, bank repossessions reached record levels for the second straight month in May, topping 93,000 properties nationwide.
As compared to May 2009, all 50 states now show an increase in annual REO activity.
Data like that won’t surprise today’s active home buyers. Foreclosed homes are prevalent, available and accounted for one-third of all home resales made in April.
Furthermore, total foreclosure actions — the sum of REO, default notices, and foreclosure auctions in May — topped 300,000 for the 15th straight month.
Foreclosures remain a huge influence on the housing market.
However, two interesting trends emerged in the data:
- 9 of the top 10 metro areas for foreclosure posted annual activity decreases
- Each of the top 4 states for Foreclosures per Household posted annual activity decreases
We can infer, therefore, that foreclosure activity may be in permanent decline in the areas hardest hit through 2007, 2008, and 2009. In 2010, the data shows, foreclosures are waning.
This is reason for optimism — especially as FHA delinquencies slow nationwide. As fewer homeowners go delinquent, the pace of foreclosures will slow further and that should help boost home values on every block in the country.
If you’ve been considered bank-owned homes for your own purchase, give a look at the RealtyTrac foreclosure report. It’s provides insight on a state-by-state level, and in the nation’s largest metropolitan areas.
Then, to complement your research, talk to your real estate about the foreclosure market and what opportunities may exist. Competition for bank-owned homes can be fierce at times, but there’s plenty of “deals” out there.
You just have to know where to look.
Fannie Mae’s Loan Quality Initiative : Repulling Your Credit Just Before Closing
A new loan quality initiative from Fannie Mae is making it harder for home buyers and refinancing homeowners everywhere to close on a mortgage.
Beginning June 1, 2010, with all new applications, Fannie Mae wants lenders to verify that borrowers have not taken on new debt during the underwriting phase of the mortgage.
If new debts are found, the mortgage is subject to a re-underwrite and a possible turndown.
For Fannie Mae, the goal is to reduce the number of loans that go bad because of new, non-disclosed debt. Lenders have the freedom to verify in whatever manner they wish, but in most cases, the verification process will amount to a credit re-pull made just prior to closing.
The underwriters will be looking for 3 things in particular — even after your loan is approved.
First, your updated credit report will show your current credit card bills and minimum monthly payments. Those numbers will replace your original numbers made at the time of application. If the debts exceed a certain threshold, your loan will be denied.
Second, underwriters will be looking at your updated credit score. If your FICO has dropped below minimum lending standards, your loan will be denied. Or, you may be subject to a new loan-level pricing adjustment.
Loan level pricing adjustments are mandatory loan fee based on your credit score.
And, lastly, underwriters will be looking at your credit report’s Credit Inquiry section. The goal is to see if you’ve been applying for credit elsewhere. Underwriters can use this information at their discretion.
Fannie Mae’s Loan Quality Initiative is just one more way that the government-backed group is trying to improve its loan pools. Unfortunately, it’ll mean more turndowns for mortgage applicants.
Therefore, take extra care of your credit between the time of application and the time of closing. Don’t buy new cars, don’t buy new appliances, and — most definitely — don’t open new credit cards. Be extra safe with your credit because a mortgage application that’s supposedly cleared-to-close can be revoked at the eleventh hour.
When in doubt, talk to your loan officer about what may or may not trigger the Loan Quality Initiative. Your loan approval is at stake.
May 2010 Jobs Report Gives A Temporary Boost To Home Affordability
On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls data from the month prior.
The release is more commonly called “the jobs report” — a major factor in mortgage rates and monthly payments.
Especially now.
With the recession officially over and growth returning to the U.S. economy, the recovery’s next frontier is jobs. As job growth increases, home affordability should take a hit. Here’s why:
- As the number of working Americans increases, so should total consumer spending
- As consumer spending increases, so should a return to risk-taking on Wall Street
- As risk-taking returns to Wall Street, bond markets should start to lose
Mortgage rates, therefore, should rise.
Furthermore, as the jobs market stabilizes and recovers, renters should be more apt to buy their first home, and homeowners should be apt to up-size. More home buyers means more competition for homes and higher home prices typically follow.
Job growth can be trickle-up for housing.
Today, however, the jobs data was not so strong. According to the government, 431,000 jobs were created in May, but of those new jobs, 95.4% represented temporary staffing for the 2010 Census. The number of private-sector jobs created fell well short of expectations and Wall Street is voting with its dollars right now. Mortgage bonds are gaining so, therefore, rates are falling.
The May 2010 jobs report may not reflect well on the economy, but home affordability around the country is improving because of it.
Consumer Confidence Hints At Higher Home Prices And Higher Mortgage Rates, Too
The Consumer Confidence Index is rising, a potentially double-edged sword for Americans, in general.
According to The Conference Board, economic confidence is as high as it’s been since August 2007 — 4 months before the start of the recession. Americans are optimistic again.
Confidence matters to the economy because as confidence increases, in theory, consumer spending follows. Consumer spending accounts for 70 percent of the U.S. economy.
It’s why Wall Street is responsive to confidence data.
When consumer confidence is rising, households start to make big-ticket purchases they may have otherwise put off indefinitely. Maybe it’s a replacing old appliances; or, trading in an old automobiles; or, splurging on a vacation.
Rising confidence can also spur real estate sales.
When confidence is rising, a growing family that chose to “make do” in their 3-bedroom, 1.5-bathroom starter home may opt to move-up to a 4-bedroom, 3-bath instead at a slightly higher monthly carrying cost. And there are families in every city in every state making those same decisions.
As a result, the housing market gets a boost — especially in the mid-to-upper price ranges. Values rise on higher demand for homes.
The downside is that growing confidence tends to push conforming and FHA mortgage rates up. This is because an expanding economy draws investment dollars away from bonds and into stocks — including mortgage bonds.
The reduced demand for mortgage-backed bonds leads bond prices to fall and mortgage rates to rise. Sometimes by a little, sometimes by lot.
So, if you’re buying a home or thinking of a refinance, rising confidence in the economy may be a signal to act sooner rather than later. Talk to your real estate agent and/or your loan officer about next steps and get your plan in place.
What’s Ahead For Mortgage Rates This Week : June 1, 2010
Mortgage markets worsened last week as concerned of a global debt crisis lessened and stock markets rebounded. The gains in stocks came at the expense of bonds — including mortgage bonds.
Conforming and FHA mortgage rates rose for the first time in 5 weeks, pulling mortgage pricing off its best levels of the year.
The best mortgage rates of last week were locked Tuesday morning.
This week, mortgage rates may rise even more. In addition to the release of May’s jobs report and consumer confidence data, fears of broader economic slowdown appear to be easing.
Day-by-day, the chances of rates rising are real.
On Tuesday, a consumer confidence survey is released. Consumer confidence is linked to economic growth because 70 percent of the economy is based in consumer spending. In theory, as consumer confidence grows, the economy should, too.
Therefore, a strong reading should push mortgage rates higher.
Then, on Wednesday, Pending Home Sales and Auto Sales data is released for last month. Both items are “big ticket” and, again, reflect on consumer confidence. Strong readings should be rough on rates.
Next, on Thursday, jobless claims data hits the wires along with worker productivity stats. Normally, these two releases don’t carry much weight, but with the jobs market in focus this year, markets will be watching for clues about Friday’s big report — the May Non-Farm Payrolls.
Anything can happen when the jobs report is released.
In April, an estimated 290,000 jobs were created and, in May, economists think more than a half-million people re-entered the workforce. This is good for the economy, of course, but can drag on mortgage rates. If job growth even comes close to the 500,000 marker, mortgage rates could zoom higher.
Mortgage rates moved higher last week but are still very low. If you’ve been thinking about refinancing your mortgage, you probably shouldn’t put it off much longer. Talk to your loan officer today — the longer you wait, the more that rates can rise.
The Supply Of New Homes For Sale Just Dropped Off A Cliff
The supply of newly-built homes for sales plummeted in April, a positive indicator for the housing market as we head into the summer months.
It’s no wonder that homebuilders are breaking new ground at the fastest clip in 2 years.
At the current sales pace, the nation’s complete supply of new homes would be sold in just 5 month’s time. That’s more than double the pace of a year ago.
Also, as more good news, in terms of total housing units, the government reports that New Home Sales topped one half-million homes sold for the first time since May 2008.
It’s a similar spike as within the Existing Home Sales data released earlier this week.
But before we declare the housing market “repaired in full”, we have to consider a few of the reasons why home sales are charting so strongly.
The first reason is the federal homebuyer tax credit’s April 30 expiration. In order to claim up to $8,000 in tax credits, home buyers must have been in mutual contract for a property before May 1. There is no doubt this contributed to a run-up in sales, especially among first-time home buyers.
The second reason is that mortgage rates have remained exceptionally low, defying expert predictions. Low rates don’t sell homes, but they do make monthly payments easier to manage for households torn between renting or buying.
And, lastly, March and April’s new home sales may have been buoyed by aggressive discounting on behalf of homebuilders. As compared to February 2010, April’s average new home sale price was lower by 13 percent. That’s a sharp drop in a short period of time.
For now, though, homes are selling, supplies are dropping, and buyer interest is high. It’s no wonder builder confidence is soaring.
Should You Refinance Your Mortgage?
Because of strife in Greece, Spain and North Korea, conforming mortgage rates are back to all-time lows. They’re at levels not seen in 50 years. For homeowners that missed the Refi Boom of November 2009, it’s a second chance.
In this well-presented, 3-minute video from NBC’s The Today Show, you’ll get tips getting low rates and choosing the best time to lock in.
Some of the topics covered include:
- Why were the experts wrong about rates moving higher this summer?
- How much money can you save with a 1 point drop in your interest rate?
- Should you buy a bigger home now that rates have fallen?
The advice in the piece is matter-of-fact and centered. There is no cheerleading and the message is honest. Mortgage rates are low and they likely won’t stay that way. If you’ve been thinking about a refinance, talk to your loan officer as soon as possible.