Insurance Policies : Which Do You Need, Which Should You Skip?

June 1, 2012

http://www.msnbc.msn.com/id/32545640

Insurance is protection against unexpected expenses and insurance policies are available for nearly any scenario you can envision — even your own ransom. But just because an insurance policy is available, that doesn’t mean you should buy it.

Some insurance policies give you good bang for the buck. Others are plain wasteful.

In this 3-minute segment from NBC’s The Today Show, you’ll hear of several common insurance policies and their relative merits to people of Arizona who purchase them.

For example, Americans will spend an estimated $450 million on pet insurance this year. Because of the policies’ restrictions and deductibles, though, it’s an insurance policy that rarely pays off. This is one reason why financial experts often recommend that you pass on purchasing pet insurance.

Within the segment, other reviewed insurance policies include :

  • Mobile phone insurance
  • Flight and travel insurance
  • Extended warranties for electronics
  • Umbrella policies
  • Renters insurance

There’s also discussion about home warranties, and why you should avoid policies that last longer than one year.

Insurance should be an important part of your overall financial plan. However, the key is to have the proper policies in place, with an appropriate amount of coverage. Review your policies annually and keep your coverage current.  

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Pending Home Sales Slip In May

May 31, 2012

Pending Home Sales IndexThe housing market took a breather in April.

After forging past its benchmark value of 100 in March, April’s Pending Home Sales Index dropped back to 95.5, its lowest reading of the year. The data suggests fewer home resales throughout Utah and nationwide in the months ahead.

A “pending home” is a home under contract to sell, but not yet closed. The Pending Home Sales Index is tracked and published monthly by the National Association of REALTORS®.

As a housing market indicator, the Pending Home Sales Index is fundamentally different from other housing metrics which often make headline news.

Unlike the Existing Home Sales report, for example; or the New Home Sales report, the Pending Home Sales Index is purported to be predictor of future housing market performance. It measures the number of homes newly under contract in a given month and, because we know that 80% of homes under contract close within 60 days, the Pending Home Sales Index can foreshadow what’s next for housing.

Other housing market metrics report on events which have already occurred.

Based on April Pending Home Sales Index, therefore, buyers and sellers should expect to see a pull-back in closed home sales through May and June. However, like everything in real estate, home sales remain a local market.

Even by region, performance varied : 

  • Northeast Region : +0.9% from March 2012
  • Midwest Region : -0.3% from March 2012
  • South Region : -6.8% from March 2012
  • West Region : -12.0% from March 2012

Despite three regions posting losses, it’s worth noting that, on an annual basis, all four regions showed gains, led by the Midwest at 23 percent. 

If you’re shopping for homes right now, the Pending Home Sales Index suggests that the current market may be “soft”, a scenario which can create ideal home-buying conditions. With mortgage rates low, home affordability has never been higher.

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Foreclosures Fall To 5-Year Low

May 30, 2012

Foreclosures April 2012

Foreclosures filings fell 5 percent between March and April of this year, and by 11 percent as compared to one year ago. The data comes from RealtyTrac. The foreclosure-tracking firm tallied fewer than 189,000 foreclosure-related actions last month — the fewest number since July 2007.

Rapidly-declining foreclosure figures are another signal that the U.S. housing market may already be in recovery.

According to RealtyTrac’s methodology, a “foreclosure filing” is any one of the following foreclosure-related events : (1) A default notice on a home; (2) A scheduled auction for a home; or, (3) A bank repossession of a home.

All three showed improvement in April :

  • Default Notices were down 4% from March 2012
  • Scheduled Auctions were down 4% from March 2012
  • Bank Repossessions were down 7% from March 2012

Furthermore, April’s bank repossessions figure is notable. With just 51,415 homes reclaimed by banks, last month’s total represents a 26 percent drop from April 2011, and is the 18th consecutive month during which bank repossessions fell. This figure suggests that banks are seeking alternatives to foreclosure, including loan modifications and short sales, when appropriate.

Indeed, the National Association of REALTORS® reports that 11 percent of April’s home resales were short sales.

Whether you’re a first-time home buyer or an experienced one, homes in various stages of foreclosure can be alluring. They’re readily available and often come cheap as compared to non-distressed properties. However, make sure to look beyond just the “list price”. Foreclosed homes are often sold as-is. This means that the property could be run-down or rife with defects that render it uninhabitable and/or un-lendable.  

If you plan to buy a foreclosed property in St. George , therefore, engage an experienced real estate professional. You can learn a lot about how foreclosures work by doing research on the internet, but when it comes to writing contracts and checking homes for defects, you’ll want an experienced agent on your side.

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What’s Ahead For Mortgage Rates : Week Of May 29, 2012

May 29, 2012

Jobs in focus this weekMortgage markets worsened slightly last week as demand for mortgage-backed bonds slacked. There was little surprise in U.S. economic data and the unfolding story lines of the Eurozone continued unabated.

Mortgage rates in Utah worsened slightly on the news, climbing for the first time in two weeks.

The change was a small one, however, and rates only eased higher Wednesday through Friday. As such, Freddie Mac’s weekly mortgage rate survey failed to capture the change – Freddie Mac’s survey is conducted Monday and Tuesday. 

According to the Primary Mortgage Market Survey, the average 30-year fixed rate mortgage rate slipped to 3.78% last week, on average, down from 3.79% during the week prior. At the same time, the number of discount points charged by banks increased to 0.8 from 0.7.

Stated differently, 30-year fixed rates mortgage rates dropped but mortgage applicants paid higher fees to get access to them. 1 discount point is equal to $1,000 per $100,000 borrowed.

Freddie Mac also reported no change in the 15-year fixed rate and the 5-year adjustable rate mortgage rates. Average mortgage rates for the twp benchmark products remained at 3.04% and 2.83%, respectively, with no change in discount points.

This week, mortgage rates figure to show a bit more movement. It’s a 4-day week because markets were closed for Memorial Day, and there is a glut of new data set for release. Most notably, the May Non-Farm Payrolls report hits Friday morning.

The jobs report affects mortgage rates because mortgage rates are linked to U.S. economic strength. Wall Street is expecting to see 164,000 net new jobs created in May. If the actual results fall short of that estimate, mortgage rates should fall. If the actual number exceeds estimates, mortgage rates should rise.

Other releases include the Case-Shiller Index, Consumer Confidence, the Pending Home Sales Index, and Personal Income and Outlays. 

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30-Year Fixed Rate Mortgage Rates Fall To 3.78% Nationwide

May 25, 2012

Freddie Mac mortgage rates

For the fifth consecutive week, conforming 30-year fixed rate mortgage rates have dropped to new all-time lows.

According to this week’s Primary Mortgage Market Survey from Freddie Mac, “prime” mortgage applicants willing to pay 0.8 discount points plus closing costs can secure a mortgage rate of 3.78%, on average.

This is a small improvement in rate over last week when the average 30-year fixed rate mortgage rate was 3.79% with 0.7 discount points.

1 discount point is equal to 1 percent of your loan size.

Like everything in real estate, though, mortgage rates are local. Freddie Mac reports that the mortgage rates available to consumers varied by region.

  • Northeast Region : 3.78% with 0.7 discount points 
  • West Region : 3.74% with 0.9 discount points
  • Southeast Region : 3.79% with 0.7 discount points
  • North Central Region : 3.83% with 0.6 discount points
  • Southwest Region : 3.81% with 0.7 discount points

North Central Region residents currently pay the lowest fees and get the highest rates. For residents of the West, it’s the opposite. Everywhere, however,mortgage rates are down. As compared to one year ago, today’s monthly carrying cost for a conforming, 30-year fixed rate mortgage is lower by $50 per $100,000 mortgaged, or $600 per year.

A $300,000 mortgage would save $1,800 annually.

Mortgage rates have been dropping because Wall Street remains concerned for the futures of Greece, Spain, Italy and the European Union. Several European nations are at-risk for a sovereign debt default and Greece remains a threat to leave the EU. To protect against potential loss, investors have been moving money away from risky holdings toward safer ones — a class that includes U.S. mortgage-backed bonds.

As demand for the bonds rise, prices do, too. This leads mortgage rates lower and so long as economic uncertainty remains, mortgage rates are expected to stay low.

Low mortgage rates make this a good time to buy or refinance a home. Talk to your loan officer to review your mortgage options.

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New Home Sales Rise For 7th Month Out Of 8

May 24, 2012

New Home Supply (2011-2012)The April New Home Sales report suggests that the market for newly-built homes is as strong as the market for existing ones. 

According to the U.S. Census Bureau, the number of new homes sold rose 3.3 percent in April to a seasonally-adjusted, annualized 343,000 units sold — its second-highest reading since April 2010.

April 2010 marked the last month of that year’s federal home buyer tax credit program.

April’s New Home Sales data also marks the 7th of eight consecutive months during which the number of new homes sold climbed nationwide, a streak unequaled in recent history. During this period, the supply of new homes for sale has dropped 13%. 

The complete new home inventory is down to 146,000 homes nationwide.

At the current pace of sales, home buyers in Cedar City and across the county would exhaust the complete supply of newly-built homes in 5.1 months.

This, too, is a significant figure.

When home supplies fall below 6 months of inventory, it’s widely believed to indicate a “seller’s market” and there hasn’t been more than 6 months of a new home supply since October 2011. This has placed upward pressure on new home prices and helps to explain why the average home sale price is up 9% from just 6 months ago.

Homes are selling, and they’re rising in price — a trend that today’s buyers should expect to continue through the summer and fall months.

Record-low mortgage rates have moved home affordability to an all-time high with home builders now reporting the highest levels of buyer foot traffic at any time since 2007. As builder confidence grows, buyers can expect to find fewer “great deals” — especially as demand for homes outpaces supply. 

If you’re a home buyer in search of new construction, therefore, the best new construction “deals” of 2012 may be the ones you find today. By 2013, the deals may be gone.

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Existing Home Sales Climb 3.4 Percent In April

May 23, 2012

Existing Home Supply

Low mortgage rates are helping to make homes more affordable. It appears home buyers have taken notice.

According to the National Association of REALTORS®, Existing Home Sales rose 3.4% in April from the month prior, registering 4.62 million homes sold on a seasonally-adjusted, annualized basis.

An “existing home” is a home that’s been previously occupied. April’s sales volume represents a 10 percent jump from April of last year.

For buyers and sellers in St. George , the April Existing Home Sales report supports the notion that the housing market may be improving; that the “bottom” occurred sometime in late-2011. Home values have been rising in many U.S. markets and home builders now report the highest levels of foot traffic through models since 2007.

Demand for U.S. housing is growing.

It also helps that home affordability is at an all-time high. Not in recorded history have this many homes for sale been affordable to buyers earning a moderate household income, on a percentage basis. Additionally, there is now a larger stock of homes from which buyers can choose.  

In April, the number of homes for sale nationwide jumped 9.5 percent to 2.54 million — the largest home resale inventory of the year.

At the current pace of sales, it would take 6.6 months for the complete home inventory to sell. Analysts consider a 6.0-month supply to be a market in balance. Anything less than a 6-month supply suggests a “buyer’s market”.

Home values peaked nationwide in April 2007. Since then, it’s been an uneven recovery. Some markets came back quickly, while others did not. On a neighborhood-by-neighborhood basis, even, there’s signifcant variance in how home values have fared.

In other words, although the April Existing Home Sales report indicates housing strength nationally, it’s the local data that matters most to today’s buyers and sellers. To get real-time real estate data for a particular street or area, talk with a local real estate agent.

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Home Affordability Reaches New High In Q1 2012

May 22, 2012

Home Affordability 2005-2012Falling mortgage rates and stagnant home prices are making a positive effect on home affordability nationwide. Never before in recorded history have so many homes been affordable to households earning a moderate annual income.

Last week, the National Association of Home Builders reported the Home Opportunity Index at 77.5 — it’s highest reading of all-time. The index indicates that more than 3 of every 4 homes sold last quarter were affordable to households earning the national median income of $65,000.

Last quarter marks the 12th straight quarter — dating back to 2009 — in which the index surpassed 70. Prior to this run, the index had never crossed 70 even once.

That said, like most real estate statistics, the Home Affordability Index has a national purview. National data is of little value to homeowners in specific cities such as Phoenix , or in specific neighborhoods.

Last quarter, home affordability varied by region.

In the Midwest, for example, affordability was highest. 7 of the top 10 most affordable markets nationwide were spread throughout Ohio, Michigan, Illinois and Indiana. The top two spots, however, went to an East Region town (Cumberland) and a Pacific Northwest Region city (Fairbanks, Alaska), respectively.

The top 5 most affordable cities for home buyers in Q1 2012 were:

  1. Cumberland, MD (99.0%)
  2. Fairbanks, AK (98.9%)
  3. Wheeling, WV (97.0%)
  4. Kokomo, IN (95.8%)
  5. Indianapolis, IN (95.8%)

At #17, the Lakeland/Winter Haven, Florida area was the top-ranked South Region city last quarter.

By contrast, the Northeast Region and Southern California ranked among the least affordable housing markets — again. Led by the New York-White Plains, NY-Wayne, NJ area, 8 of the 10 least affordable areas were in the Mid-Atlantic and California, and for the 16th consecutive quarter the New York metro area was ranked “Least Affordable”.

Just 31.5 percent of homes were affordable to households earning the area median income there, up from 25.2 percent six months ago.

The rankings for all 225 metro areas are available for download on the NAHB website.

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What’s Ahead For Mortgage Rates This Week : May 21, 2012

May 21, 2012

Existing Home Sales Mortgage bonds improved last week on lingering concerns for the European Union, plus weaker-than-expected economic data here at home. Global investors were net buyers of mortgage-backed securities last week, pushing mortgage rates lower nationwide.

According to Freddie Mac’s mortgage rate survey, conforming 30-year fixed rate mortgage rates slipped to 3.79%, on average, last week for borrowers willing to pay 0.7 discount points and a full set of closing costs.

This is the lowest on-record.

15-year conforming fixed rate mortgage rates also fell to a new all-time low, registering 3.05% with 0.7 discount points and closing costs.

1 discount point is equal to 1 percent of your loan size.

Unfortunately, not all mortgage applicants in California are getting access to Freddie Mac’s posted rates. This is because the “national mortgage rates” assume a 30-day closing window and few banks have been closing loans in 30 days lately. Persistently low mortgage rates have created an appraiser scarcity which, among other reasons, is forcing banks to stretch the traditional 30-day closing window by fifteen days or more.

Longer rate locks carry higher mortgage rates.

For home buyers in St. George , purchase money loans can often be accommodated in 30 days. For refinancing households, however, the process can take up to 60 days. As a result, refinancing homeowners are finding the 3.79% mortgage rates promised by Freddie Mac’s survey somewhat elusive.

This week, though, as chatter of a European Union dissolution grows, investors are seeking safety of principal. Lately, they’ve been finding it in the U.S. mortgage bond market. As demand for mortgage bonds rises, mortgage rates should fall for both 30-day locks and 60-day ones.

This will aid everyone looking for a home loan.

Other news set for release this week includes April’s Existing Home Sales report and New Home Sales report. Both will be closely watched because housing is tied to U.S. economic recovery. Strong results in either data set may push mortgage rates higher. 

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Is More Fed-Led Stimulus On Its Way?

May 18, 2012

FOMC minutesThe Federal Open Market Committee released its April 2012 meeting minutes this week, revealing a Federal Reserve in the ready in the event additional monetary stimulus is needed.

The Fed Minutes function much like the minutes from a business meeting; or, condominium association meeting, for example. It’s a detailed review of the conversations and debates between FOMC members, and is typically published 3 weeks after a Federal Reserve meeting.  

The Fed Minutes is a follow-up statement on the FOMC’s more well-known, post-meeting press release. It’s also much more lengthy.

Whereas the April 25, 2012 press release totaled 444 words, the Fed Minutes spanned 6,618. 

Those extra words are important, too, because the detail offered within the Fed Minutes lends insight into how our nation’s central bank views the U.S. economy, its strengths and weaknesses, and its threats.

From the Fed Minutes, some of the Fed’s comments includes :

  • On employment : Unemployment may remain elevated through 2014
  • On housing : Tight underwriting is “holding down” the housing market
  • On rates : The Fed Funds Rate should remain low until late-2014

There was also substantial talk about Europe and its role in the U.S. economy. Notably, U.S. financial institutions have been actively reducing their European exposure to contain damage in the event of a full-blown economic crisis abroad.

This has had the net effect of lowering mortgage rates in California. Mortgage bonds often benefit from economic uncertainty.

In addition, because several Fed members acknowledged a willingness to add new stimulus to the U.S. economy, mortgage markets are accounting for the possibility it could happen. It’s unclear whether stimulus would be added after the Fed’s next meeting, or at some point later in the year, or at all.

The FOMC has its next scheduled meeting June 19-20, 2012.

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