Military Members : You Have 3 Weeks To Buy A Home, Claim Up To $8,000 In Tax Credits

If you're an eligible federal employee or qualified military personnel, you have 3 weeks from this Saturday to use the federal home buyer tax credit, and to claim up to $8,000 in federal income tax credits. 

According to the IRS, eligible persons include members and spouses of the uniformed services, members and spouses of the Foreign Service, and intelligence community employees who served at least 90 days of qualified, extended duty service outside of the United States between January 1, 2009 and April 30, 2010, and their spouses.

Eligible persons must be under contract for a new home on or before April 30, 2011, with the home's closing occurring on or before June 30, 2011.

The federal home buyer tax credit is a true credit, too. Eligible buyers receive a dollar-for-dollar tax reduction equal to 10 percent of the subject home's purchase price, not to exceed $8,000 for first-time home buyers, and not to exceed $6,500 for repeat home buyers.

Repeat buyers must have lived in their "main home" through 5 of the last 8 years in order to be eligibke.

Furthermore, both the buyer(s) and the subject property must meet certain minimum eligibility requirements:

• The home may not be purchased from a parent, spouse, or child
• The home may not be purchased from an entity in which the seller is a majority owner
• The home may not be acquired by gift or inheritance
• The home sale price may not exceed $800,000
• Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers

The complete program description is published on the IRS website.

For additional information regarding your tax credit eligibility, you may want to speak with an accountant or other tax professional. It's often worth the cost.

How Does Your Real Estate Tax Bill Compare To Other Parts Of The Country?

Mortgage rates may be a function of free markets, but real estate taxes are a function of government. And, depending on where you live, your annual real estate tax bill could be high, low, or practically non-existent.

Compiling data from the 2009 American Community Survey, the Tax Foundation, a non-partisan educational organization in Washington D.C., published property taxes paid by owner-occupied households, county-by-county.

The report shows huge disparity in annual property taxes by region, and by state.

As a percentage of home valuation, Southeast homeowners tend to pay the fewest property taxes overall, while Northeast homeowners tend to pay the most. But statistics like that aren't especially helpful. What's more useful is to know how local real estate taxes stack up as compared to local, median household incomes.

Not surprisingly, real estate taxes are least affordable to homeowners in the New York Metro area. The 10 U.S. counties with the highest tax-to-income ratios physically surround New York City's 5 boroughs. The areas with the lowest tax-to-income, by contrast, are predominantly in southern Louisiana.

A sampling from the Tax Foundation list, here is how select counties rank in terms of taxes as a percentage of median income:

• #1 : Passaic County (NJ) : 9.7% of median income
• #6 : Nassau County (NY) : 8.6% of median income
• #15 : Lake County (IL) : 7.2% of median income
• #18 : Cheshire County (NH) : 7.1% of median income
• #70 : Travis County (TX) : 5.0% of median income
• #90 : Marin County (CA) : 4.6% of median income
• #110 : Middlesex County (MA) : 4.4% of median income
• #181 : Sarasota County (FL) : 3.9% of median income
• #481 : Douglas County (CO) : 2.4% of median income
• #716 : Maui County (HI) : 1.3% of median income

The U.S. national average is 3.0 percent.

The complete, sortable list of U.S. counties is available at the Tax Foundation website. For specific tax information in your neighborhood or block, talk with a real estate agent.

March Fed Minutes Show Inflation Risks And Rate Hikes On The Horizon

The Federal Reserve released its March 15 meeting minutes Tuesday. The notes revealed a Federal Reserve split between optimism and caution for the U.S. economy.

The minutes' official name is "Fed Minutes". It's a periodic publication, published 3 weeks after each meeting of the Federal Open Market Committee. The FOMC meets 8 times annually, so the Fed Minutes is published 8 times annually, too.

The Fed Minutes is similar to the meeting minutes released after a condo board gets together, or after a meeting of the Board of Directors at a large corporation. The minutes give a detailed account of the important conversations and debates that occurred among the attendees.

At the Federal Reserve, those conversations are deep and, as such, the minutes are long; much longer than the more well-known, post-meeting press release anyway.

Whereas the press release is measured in paragraphs, the minutes are measured in pages.

Here is some of what the Fed discussed last month:

• On inflation : Pressures are rising, but largely because of food costs and oil costs.
• On housing : The market remains "depressed" with large inventory and weak demand.
• On stimulus : The Fed will keep its $600 billion bond plan in place.

In addition, there was talk about ending the Federal Reserve's accommodative monetary policy (i.e. the near-zero percent Fed Funds Rate). The FOMC's voting members unanimously elected to leave the Fed Funds Rate near 0.000 percent last month, but there was talk of raising the benchmark rate later this year.

Conforming and FHA mortgage rates in Atlanta are mostly unchanged since the Fed Minutes release.

Plan To Sell Within 5 Years? Consider An Adjustable-Rate Mortgage.

Which is better -- a fixed-rate mortgage or an adjustable-rate mortgage? It's a common question among home buyers and refinancing households in Georgia.

The answer? It depends. 

Fixed-rate mortgages give the certainty of a known, unchanging principal + interest payment for the life of the loan. This can help you with budget-setting and financial planning. Some homeowners say fixed-rate loans they offer "peace of mind".

Adjustable-rate mortgages do not.

After a pre-determined, introductory number of years, the initial interest rate on the note -- sometimes called a "teaser rate" -- moves up or down, depending on the existing market conditions. It then adjust again every 6 or 12 months thereafter until the loan is paid in full.

ARMs can adjust higher or lower so they are necessarily unpredictable long-term. However, if you can be comfortable with uncertainty like that, you're often rewarded with a very low initial interest rate -- much lower than a comparable fixed rate loan, anyway.

Freddie Mac's weekly mortgage survey highlights this point.

The interest rate gap between fixed-rate mortgages and adjustable-rate mortgages is growing. It peaked 2 weeks ago, but remains huge at 1.16 percentage points.

On a $200,000 home loan, this 1.16 FRM/ARM spread yields a monthly principal + interest payment difference of $136, or $8,160 over 5 years, the typical initial teaser rate period.

Savings like that can be compelling and may push you toward an adjustable rate loan.

You might also consider a 5-year ARM over a fixed-rate loan if any of these scenarios apply:

1. You're buying a new home with the intent to sell it within 5 years
2. You're currently financed with a 30-year fixed mortgage and have plans to sell the home within 5 years
3. You're interested in low payments, and are comfortable with longer-term payment uncertainty

Furthermore, homeowners whose existing ARMs are due for adjustment might want to refinance into a brand new ARM, if only to push the teaser rate period farther into the future.

Before choosing ARM over fixed, though, make sure you speak with your loan officer about how adjustable rate mortgages work, and their near- and long-term risks. The payment savings may be tempting, but with an ARM, the payments are never permanent.

How To Clean A Gas Grill

Whether you barbecue for friends or family once annually, or through all 4 Atlanta seasons, it's important to keep a clean gas grill. A well-maintained grill will help your food taste its best -- no matter what you're cooking up.

Cleaning a gas grill is simple and should be performed at least once every 12 months for light use, and once every 6 months for heavy use. You'll need the following tools:

1. A drop cloth
2. Aluminum foil
3. A regular scrub brush plus a wire brush
4. An active garden hose
5. Dish detergent
6. A soft sponge
7. A bucket
8. Rubber gloves

With these tools in-hand, follow these basic steps.

First, disconnect the propane tank and move the grill onto the drop cloth. Open the grill and remove its grates and the flame guards (the v-shaped metal pieces on top of the burners). Then, disconnect the igniters and remove the burners. Soak the grates in hot water if they're excessively dirty.

Set the pieces aside for cleaning.

Next, clean out any loose debris from the bottom of the grill. Use the detergent to make a soapy mixture and scrub the bottom of the grill, including its grill pans and grease trays. Clean the grates at this time, too.

Gently brush the outside of the burners with the wire brush, then allow running water from the garden hose to flow through the tubes to clean out the insides. If the burners appear to be cracked, replace them according to the grill manufacturer's instructions.

Allow all of the above cleaned pieces to air dry, then reassemble the grill.

Next, clean the outside of the grill using a soapy mixture and a soft sponge, treating early-stage corrosion with some cooking oil applied like car wax. If your grill has a stainless steel exterior, wipe with the grain to minimize streaking. And that's it!

Cleaning a gas grill can be time-consuming, but better tasting food is worth it. Plus, your grill will last longer.

How Does Your Work Commute Compare To Other Cities?

As part of the Census Bureau's data collection activities from 2005-2009, a number of interesting charts have been published at http://census.gov.

The data should not be confused with Census 2010 -- a separate survey conducted every 10 years. This is the first-ever, 5-year American Community Survey. Based on data from 3 million households, it details social, economic, housing, and demographic data "for every community in the nation".

Among the surveys:

• Median Household Income, Inflation-Adjusted To 2009 Dollars (Chart)
• Median Housing Value Of Owner-Occupied Housing Units (Chart)
• Percent Of Households That Are Married, With Children Under 18 (Chart)

The ACS survey also charts average commute time by county. The chart is shown at top.

Whether you live in a "long commute" town like Richmond, NY (40 minutes), or a "short commute" town like King, TX (3.4 minutes), rising gas prices have made commute times and distances relevant to everyone.

Since the start of 2011, the average price for gasoline is higher by 54 cents per gallon. Assuming 22 miles per gallon on a passenger car, that's an increase of 2.5 cents of gasoline per mile driven in the last 90 days. It's a cost that adds up quickly, and can affect a household budget. Plan for higher pump prices moving forward, too. Historically, gas prices surge between April and June.

The American Community Survey is loaded with charts and data. It can tell you a lot about your current neighborhood, and any neighborhood to which you may want to relocate. Then, to bridge the ACS data with community details such as school performance and typical home prices, talk to a real estate professional.

Lock Now? Friday's Job Report Expected To Push Mortgage Rates Up.

Friday is a pivotal day for mortgage markets and conforming mortgage rates across Georgia. At 8:30 AM ET, the government will release its March Non-Farm Payrolls report.

More commonly known as "the jobs report", the monthly Non-Farm Payrolls is a market-mover and home buyers would do well to pay attention. Depending on the report's strength, mortgage rates could rise, or fall, by a measurable amount tomorrow morning.

It's because so much of the today's mortgage market is tied to the economy, and economic growth is dependant on job growth.

With more job growth, there's more consumer spending and consumer spending accounts for the majority of the U.S. economy. Additionally, it generates more payroll taxes to local, state and federal governments. This, too, puts the broader economy on more solid footing.

Between 2008 and 2009, the economy shed 7 million jobs. It has since recovered 1.5 million of them. Friday, analysts expect to count another 190,000 jobs created. If the actual figure falls short, expect mortgage rates to ease.

Otherwise, look for rates to rise. Probably by a lot.

If you're shopping for a mortgage right now, consider your personal risk tolerance. Once the BLS releases its data, it will be too late to lock in at today's interest rates. If the idea of rising mortgage rates makes you nervous, execute your rate lock today instead.

On a 30-year fixed rate loan, each 1/8 percent increase to rates adds roughly $7 per $100,000 borrowed.

January 2011 Case-Shiller Index : Weak And Flawed

Standard & Poors released its Case-Shiller Index for the month of January this week. The index is a home valuation tool, measuring the monthly and annual changes in home prices in select cities nationwide.

January's Case-Shiller Index gave a poor showing. As compared to December 2010, home values dropped in 19 of the Case-Shiller Index's 20 tracked markets. Only Washington, D.C. gained. The results were only modestly better on an annual basis, too.

18 of 20 markets worsened in the 12 months ending January 2011.

According to the report, values are down 3.1% from last year, retreating to the same levels from Summer 2003. As a buyer or seller in today's market, though, don't read too much into it. The Case-Shiller Index is far too flawed to be the final word in housing.

The index has 3 main flaws, in fact.

The first flaw is the Case-Shiller Index's lack of breadth. The report is positioned as a national index, but its data is sourced from just 20 cities nationwide.

Putting that number in perspective: the Case-Shiller Index tracks home values from fewer than 1% of the 3,100 U.S. municipalities -- yet still calls the report a "U.S. Average".

A second flaw in the Case-Shiller Index is how it measures home price changes, specifically. Because the index only considers "repeat sales" of the same home in its calculations, and only tracks single-family, detached property, it doesn't capture the "full" U.S. market. Condominiums, multi-family homes, and new construction are ignored in the Case-Shiller Index algorithm. 

In some regions, homes of these excluded types represent a large percentage of the market.

And, lastly, the Case-Shiller Index is flawed because of the amount of time required to release it.

Today, it's almost April and we're talking about closed home resales from January which is really comprised of homes that went under contract in October -- close to 6 months ago. Sales prices from 6 months ago is of little value to today's Atlanta home buyer, of course.

The Case-Shiller Index can be a helpful tool for economists and policy-makers trying to make sense of the broader housing market, but it tends to fail for individuals like you and me. When you want accurate, real-time housing figures for your local market, talk to your real estate professional instead.

Pending Home Sales Rebound; Suggest Brighter Spring For Housing

On a seasonally-adjusted basis, the Pending Home Sales Index rose 2 percent last month, according to the National Association of REALTORS®. A "pending home sale" is defined as a home under contract to sell, but not yet closed.

February's Pending Home Sales Index rebound breaks a 2-month losing streak, and reverses the recent downward momentum in housing. Both Existing Home Sales and New Home Sales volume showed a sizable loss last month. 

For buyers and sellers of real estate in Atlanta , the Pending Home Sales Index is of particular import. It's one of the few forward-looking indicators in housing, and February's data suggests a stronger spring season than was the winter.

Region-by-region, Pending Home Sales data varied:

• Northeast Region: -10.9%
• Midwest Region : +4.0%
• South Region : +2.7%
• West Region : +7.0%

3 of 4 regions showed marked improvement, which is good for housing. In the fourth -- New England -- it's likely that inclement weather hampered results.

February was colder-than-normal and the month capped a record-breaking snowfall season for the region. Anecdotally, fewer homes are sold in the cold-and-snow of winter and it's likely that the weather affected local housing markets.

Looking to March and April, therefore, we should expect Existing Home Sales data to rebound. This is because 80% of "pending" homes close within 60 days, and because improving weather should release pent-up demand for housing.

More sales plus higher home demand tends to lead home prices higher. If you're in the market for a new home, consider that your best negotiation leverage comes in a weak market. As the seasons turn, your leverage looks poised to slip.

The best time to buy this year may be right now.

Water Conservation Tips For Your Home And Garden

 

According to the EPA, the average U.S. household spends close to $500 each year on water and sewage bills. But by making just a few small changes, that figure could drop by as much as $170 annually. It's all in how you use your water.

In this 4-minute video from Lowe's, you'll learn basic water conservation techniques that you can immediately put to work.. 

Some examples:

• Don't rinse food from dishes before putting them in a dishwasher. Scrape the dishes instead.
• When brushing your teeth or shaving, turn off the water at the sink.
• Use a rain barrel to capture rain, then use the rain to water plants and shrubs.

There's a host of tips in the video but the recurring theme is that you should never "leave water running". This is because water at home is "treated" water and the amount of energy required to treat 5 minutes' worth of water from a faucet is equivalent to the amount of energy required to run a 60-watt light bulb for 14 hours.

That's a lot of energy.

Water is a precious resource, and it can be expensive, too. Therefore, help the environment and your budget at the same time -- practice water conservation at home.

15-Year Fixed Rate Mortgages Look Cheap Compared To Comparable 30-Year Fixeds

It's a great time for Atlanta buyers and homeowners to look at the 15-year fixed rate mortgage.

According to Freddie Mac's weekly Primary Mortgage Market Survey, the relative "discount" of a 15-year fixed rate loan as compared to a comparable 30-year product is the largest in recorded history. The interest rate spread between the two benchmark products is now 0.77%, nearly double the recent, 5-year average of 0.44%.

Despite its lower rates, however, homeowners that opt for a 15-year fixed mortgage should be prepared for higher monthly payments. This is because the principal balance of a 15-year fixed is repaid in half as many years as with a 30-year amortizing product.

The payment increase is 41% higher at today's rates. If you can manage that, though, you'll reap dramatic interest payments savings over time. For each $100,000 borrowed at today's market interest rates, your mortgage interest costs on a conforming 15-year term mortgage will be lower by $56,000 versus an identically-structured 30-year term. The more you borrow, the more you save.

That said, not everyone should use the 15-year product.

One reason you may want to avoid 15-year products is because the higher payments may lead to financial stress. Unless your monthly income far exceeds your monthly debts, choosing a 30-year product may feel safer for you.

Another reason is that, with less mortgage interest paid, 15-year mortgages don't allow for as many mortgage interest tax deductions. This can have tax implications to you each year. Or, maybe you prefer to have your home leveraged, investing "spare dollars" in stocks and bonds.

These are all legitimate cases to stick with a 30-year term, but if you've ever explored the idea of using a 15-year fixed rate mortgage for your home, today, the math is in your favor. Talk to your loan officer before the rates start rising.

New Home Sales Fall To All-Time, Recorded Low. Maybe.

Sales of newly-built homes plunged 17 percent to an seasonally-adjusted, annualized 250,000 units in February, and the supply of new homes rose to 8.9 months in February -- a 1.5 month jump from January.

It's the lowest New Home Sales reading in recorded history, according to the Census Bureau, and the third straight report to signal that home values may be slow to rise in Atlanta and nationwide this season.

Earlier this week, the National Association of REALTORS® reported Existing Home Sales down 10 percent from February, and the Federal Home Finance Agency said home values slipped 0.3 percent between December and January.

The media has picked up on the trend, too. 

• No Spring In Housing's Step (WSJ)
• Is Housing Really In Recovery (CNBC)
• Experts See Weak Recovery (UPI)

There's two interesting angles here. First, the one that's largely neglected in the stories online.

Although New Home Sales read -17% last month, the data's Margin of Error read ±19%. This means that, once additional homes are added to February's New Home Sales tally, it's possible that the reading actually rose 2%.

Because the Margin of Error exceeds the measured reading, February's New Home Sales figures are of "zero confidence". The Census Bureau even says as much in its report.

Or, if the initial reading is accurate, a second story emerges. Namely, how an increase in home supply may help this season's buyers to negotiate better prices for a home, and upgrades from a builder.

There's often more to a real estate story than its headline and February's New Home Sales proves it.

10 U.S. Cities With The Steepest Rent Increases (2010)

Home sales data is easing so far in this calendar year. Home resales and new construction have dropped to multi-month lows and, in many cities, home supplies are rising. One housing sector that's not slowing, however, is rentals.

The rental market is booming.

As reported by the Wall Street Journal, the average apartment vacancy rate is 6.6% nationwide, down from 8.0% last year. In addition, the number of occupied apartments rose by more during Q4 2010 than during any comparable period of the last 10 years.

It's a major reason why rents are up 2.3%.

Some areas, however, fared worse than others. This study of rent increases as published on MSNBC, for example, lists the 10 U.S. cities in which rents increased the most last year. And they may not be the cities you'd expect.

In order:

1. Greenville, SC (+11.2%; $669 average monthly rent)
2. Chattanooga, TN (+10.4%; $726 average monthly rent)
3. Savannah, GA (+8.4%; $866 average monthly rent)
4. Portland, OR (+8.1%; $875 average monthly rent)
5. San Jose, CA (+8.0%; $1,716 average monthly rent)
6. Nashville, TN (+8.0%; $786 average monthly rent)
7. Tacoma, WA (+8.0%; $900 average monthly rent)
8. Denver, CO (+7.5%; $873 average monthly rent)
9. Washington, DC (+7.4%; $1,473 average monthly rent)
10. Raleigh, NC (+7.4%; $785 average monthly rent)

Big cities New York (#18), San Francisco (#19), and Chicago (#24) showed modest gains, by comparison.

Not everyone across Georgia wants to be a homeowner, but renters are facing a squeeze. With mortgage rates historically low and home values slow to recover, in many cities, the cost-benefit analysis is shifting toward buying.

Existing Home Sales Unexpectedly Drop In February

Existing Home Sales fell 10 percent last month, according to a report from the National Association of REALTORS®.

On an annual basis, 4.88 million homes were sold in February -- the first time annualized home resales dropped below 5,000,000 since November 2010.

An "existing home" is one that's not considered new construction.

And it's not just sales volume that's down. Home inventory is higher, too. At the current pace of sales, the number of months needed to sell the complete home resale inventory rose by 1.1 months, to 8.6 months nationally.

It's the biggest one-month jump in supply since July 2010 -- the month after last year's federal home buyer tax credit program expired.

The data is somewhat unexpected, too. NAR's Pending Home Sales report is a reliable predictor for the housing market and, based on recent findings, home sales were projected to climb in February. It's unclear why they didn't.

Regardless, the February sales data reveals an interesting breakdown by buyer-type. Notably, the percentage of first-time home buyers in the market grew by more than any other segment.

• First-time home buyers : 34% of all sales, +5% from January
• Repeat buyers : 47% of all sales, -1% from January
• Real estate investors : 19% of all sales, -4% from January

Cash buyers represented 33 percent of all sales, up 1 tick from the month prior.

For Atlanta home buyers, February's Existing Home Sales data suggests more home supply and lower home prices this spring. However, rising mortgage rates could eliminate the monthly savings attributed to falling home values.

To get the most from your mortgage-buying dollar, lock while rates are low.

Get That Last Drop Of Ketchup (And Other Household Money-Stretchers)

According to Consumer Reports, Americans waste as much as 25% of the products they purchase. From food to pharmaceuticals, pesky packaging is making it hard for consumers to use "the last drop" of the things they buy and, as such, products are thrown out prematurely.

It doesn't have to be that way. Using household tools and basic steps, you, too, can make less waste and stretch your household dollar. This 5-minute interview on NBC's The Today Show shows you how.

For example, you'll learn:

• How to get the last bit of ketchup from the jar (without adding water)
• How to get the last bit of hair gel from the plastic bottle
• How to get the last bit of body lotion from the bottom of the "pump" jar

Furthermore, you'll learn how to rescue over-ripe bananas.

The less you waste at home, the more money you'll save in the bank. Watch the video, take notes, and start making less waste.

Good News For Sellers -- Housing Starts Plummet In February

Single-family housing starts plunged unexpectedly last month. Nationwide, starts fell 12 percent from the month prior; and 29 percent from February of last year.

February's figures represents the worst 1-month drop in housing starts since May 2010 -- the month that followed the expiration of last year's federal home buyer tax credit -- and puts single-family housing starts at a 24-month low.

In addition, single-family Building Permits plunged last month, too, shedding 9 percent from January. A building permit is a local government's certification and approval to begin home construction.

Housing permits are an excellent forward-indicator for the housing market. This is because 93 percent of homes start construction within 60 days of permit-issuance. Fewer permits, therefore, directly reduces the number of new homes coming to market in the coming months.

For home buyers in Atlanta looking at new construction or existing homes, this news should create a sense of urgency.

Home prices are based on supply and demand and overall home supply looks headed for a fall. Plus, with mortgage rates retreating and homebuilders projecting higher sales this summer, buyers may face rising home prices before long.

Sellers look poised to regain negotiation leverage.

For now, though, home affordability remains high with properties inexpensive and mortgage rates still low, historically. If you plan to buy a home in 2011, the February 2011 Housing Starts data may be reason to move up your time frame.

With home supplies dropping, prices are likely to rise.

Homebuilders Expect More Sales Volume This Year

Homebuilders are optimistic about the housing market this spring, relative to recent months.

According to the monthly Housing Market Index as published by the National Association of Homebuilders, after 4 straight months of reading 16, March homebuilder confidence ticked 1 point higher to 17.

It's the highest confidence reading in 10 months.

A value of 50 or better indicates "favorable conditions" for home builders; with more builders viewing sales conditions as "good" than "poor".

HMI hasn't read higher than 50 since April 2006.

Regionally, the Housing Market Index showed mixed results. Confidence fell 1 point in the Northeast, held firm in the Midwest, and rose in the Southeast and West regions by 2 points and 4 points, respectively.

As an index, the monthly survey is actually a composite of three separate homebuilder surveys -- a report on single-family sales; a report on current buyer foot traffic; and a projection for single family sales in the next 6 months.

March's HMI breakdown shows that builders expect sales to be brisk over the next few months. Projected Single-Family Sales is running at its highest level since May 2010 -- right as the $8,000 federal homebuyer tax credit was ending.

• Single-Family Sales : 17 (Unchanged from February)
• Buyer Foot Traffic : 12 (Unchanged from January)
• Projected Single-Family Sales : 27 (+2 from February)

For home buyers in Atlanta and across the country , the March Housing Market Index may signal the end of "builder discounts" and free upgrades. As home sales increase, builders are often less likely to make concessions.

In conjuction with rising mortgage rates and new, mandatory loan costs, buying a newly-built home may never be as inexpensive as it is right now.

If you expect to buy a newly-built home this year, consider moving up your time frame. The longer you wait, the more it may cost you.

A Simple Explanation Of The Federal Reserve Statement (March 15, 2011 Edition)

Today, for the second straight meeting, the Federal Open Market Committee voted unanimously to leave the Fed Funds Rate unchanged within its target range of 0.000-0.250 percent.

The vote was 10-0.

In its press release, the FOMC noted that since its January 2011 meeting, the economic recovery "is on firmer footing", and that the labor markets are "improving gradually". In addition, household spending "continues to expand". Nonetheless, the Fed said, the economy remains constrained by rising commodity prices and the "depressed" housing sector.

The FOMC statement also re-affirms the group's plan to keep the Fed Funds Rate near zero percent "for an extended period", and to keep its $600 billion bond market support package -- more commonly called "QE2" -- intact.

And, lastly, for the third straight time, the Federal Open Market Committee's post-meeting release statement included a paragraph detailing the Federal Reserve's dual mandate of managing inflation levels, and fostering maximum employment. Although it acknowledged inflationary pressures on the economy, the Fed said inflation remains too low for the economy currently, and that unemployment remains "elevated". 

In time, the Fed expects both measurements to improve.

Mortgage market reaction to the FOMC has been negative since the statement's release. Mortgage rates in Atlanta are unchanged, but poised to worsen.

The FOMC's next scheduled meeting is a 2-day event, April 26-27, 2011.

Your Mortgage Rate Strategy For Today's FOMC Meeting

The Federal Open Market Committee meets today in Washington D.C. The FOMC is a special group within the Federal Reserve, led by Fed Chairman Ben Bernanke, and consisting of 12 members.

The FOMC's official schedule calls for 8 meetings annually at which it reviews the nation's economic and financial conditions, and chooses whether to change existing monetary policy.

The group's last rendez-vous was a 2-day affair, January 25-26, 2011.

Today's FOMC meeting represents a bona fide risk to home buyers and rate shoppers in Atlanta and across the country. This is because when the Fed meets, Wall Street gets nervous which, in turn, causes mortgage rates to get volatile. And, as mortgage rates go, so goes home affordability. 

Rate shoppers learned this the hard way after the FOMC's last meeting.

In January, Wall Street deemed the Fed's status quo message too soft on the looming threat of inflation. As a result, conforming mortgage rates rose through 7 of the next 10 days, driving pricing to its worst levels of the year.

This may happen again beginning today.

At 2:15 PM ET, the FOMC will adjourn and make a press release to the markets. The Fed is expected to keep the Fed Funds Rate near its target range of 0.000 percent, and to keep its $600 billion bond buy program in place. That doesn't mean mortgage rates will idle, however.

Depending on the verbiage of the Fed's statement, Wall Street will make its new bets. A tough approach on inflation should push mortgage rates down; a soft approach should pressure rates up. Either way, you may want to lock your mortgage rate prior to 2:15 PM ET -- just to be safe.

Once the Fed adjourns, you're at the market's mercy.

Get Your Spring Cleaning Checklist

The calendar has turned March in Atlanta and warmer weather is around the corner. Get ready for Spring Cleaning Season.

For households in which Spring Cleaning is an annual ritual, this helpful checklist from MarthaStewart.com makes sure no job gets left behind.

From the smallest of chores to the biggest of projects, many common tasks are covered, including:

• Vacuuming and shampooing rugs
• Waxing wooden furniture and non-wood floors
• Dusting books and shelves
• Resealing grout lines in kitchens and bathrooms
• Clean and/or launder window treatments

Then, you'll want to remember to flip your mattresses, change your air filters, and test your home's smoke alarm batteries.

Most of the cleaning can be handled with household items like rags and cleansers, but for a few of the items, you may want to rent a machine from a local hardware store or supermarket. Carpet shampooers are a noteworthy example. Rental costs are nominal and the potential time savings are big.

For some households Spring Cleaning is a one-day affair. For others, it's a weekend project that lasts a month. However you choose do it, keep this checklist handy and you'll have an easier time.

FHA Streamline Refi Changes : No Income, No Job Required

FHA Streamline Refinance guidelines are changing. For the better.

In an effort to improve its loan portfolio, the FHA is loosening approval standards on its popular refinance program, rendering large groups of homeowners suddenly FHA Streamline-eligible.

Now, that may seem counter-intuitive -- lowering qualification standards in order to reduce loan defaults -- but in the FHA's case, it makes complete sense. It's because the FHA doesn't make loans. It insures them. What's good for FHA-insured homeowners is good for the FHA, therefore.

All things equal, lower housing payments for its insured homeowners should correlate to fewer FHA loan defaults in Georgia and   nationwide.

One interesting facet of the FHA's new rulebook is the manner in which the government group is applying common sense to the approval process. So long as the homeowner is current on their mortgage and there's a demonstrable benefit in the refinance, the FHA reasons, there's good reason to insure the new loan.

The FHA defines "current on the mortgage" as being up-to-date on payments, and having zero 30-, 60-, or 90-day lates within the last 12 months. Demonstrating benefit is a little more tricky.

According the FHA, "benefit" is defined by refinance type.

When refinancing any fixed rate mortgage, or an existing ARM to a new ARM, the borrower's new monthly (principal + interest) + (mortgage insurance premium) must be 5% or more below the current levels to meet the FHA's minimum benefit requirements. 

The refinance of any ARM to a fixed rate mortgage is considered an acceptable benefit.

Beyond that, Streamline Refinance guidelines are simple:

• Income is not verified, or required
• Employment is not verified, or required
• Assets are not verified, unless required to meet closing costs

Note that an appraisal is not required, either This allows "underwater" homeowners to refinance their FHA-insured home loan without penalty. The downside is that without an appraisal, the new loan size may not exceed the current principal balance plus the FHA's 1% upfront mortgage premium. All other charges must be paid as cash at closing.

The FHA Streamline program is a refinance program special to FHA-insured homeowners. To confirm your own eligibility, check with your lender.

Loan Fees Set To Rise For Conforming Mortgage Applicants

Beginning April 1, 2011, Fannie Mae is increasing its loan-level pricing adjustments. Conforming mortgage applicants in Georgia should plan for higher loan costs in the months ahead.

If you've never heard of loan-level pricing adjustments, you're not alone; they're an obscure mortgage pricing metric and, thus, are rarely covered by the media. That doesn't make them any less relevant, however.

LLPAs are mandatory closing costs assessed by Fannie Mae and Freddie Mac, designed to offset a given loan's risk of default. LLPAs were first introduced in April 2009.

This April's amendment is the 6th increase in 2 years. LLPAs can be costly.

In addition to an up-front, quarter-percent fee applied to all loans, there are 5 additional "risk categories" in the LLPA equation:

1. Credit Score : Lower FICO scores trigger additional costs
2. Property Type : Multi-unit homes trigger additional costs
3. Occupancy : Investment properties trigger additional costs
4. Structure : Loans with subordinate financing may trigger additional costs
5. Equity : Loans with less than 25% equity trigger additional costs

Adjustments range from 0.25 points (for having a 735 FICO score) to 3.000 points (for buying an investment property with just 20% downpayment). And they're cumulative. This means that a borrower that triggers 3 categories of risk must pay the costs associated with all 3 traits.

Loan-level pricing adjustments can be expensive -- up to 5 percent or more of your loan size in closing costs. The fees can be paid a one-time cash payment at closing, or they can be paid in the form of a higher mortgage rate.

The loan-level pricing adjustment schedule is public. You can research your own loan scenario at the Fannie Mae website, but you may find the charts confusing.

Phone or email your loan officer if you're unsure of what you're reading.

Federal Income Tax Deadline Extended To April 18, 2011

April 15 is the traditional due date for federal income taxes. It's a deadline so ingrained in the American psyche that the April 15 calendar date is often called, simply, "Tax Day".

In 2011, however, federal taxes aren't due April 15. They're due April 18. It's because of a combination of holiday, calendars, and tax law.

The change centers on Emancipation Day.

Emancipation Day is a public celebration in the District of Columbia. Named a holiday in 2005, Emancipation Day honors President Abraham Lincoln's April 16, 1862 signing of the Compensation Emancipation Act.  

Emancipation Day is a non-working day in the nation's capitol but, this year, Emancipation Day falls on a Saturday. The municipality will observe the holiday Friday instead. This means that all of Washington, D.C. will be "closed" Friday, April 15 -- the usual tax filing deadline date.

This includes the IRS.

Therefore, to accommodate Emancipation Day, the government is extending this year's federal tax filing deadline to April 18, 2011. This year marks the second time Emancipation Day has forced the change of federal tax filing deadlines.

Also, as a non-related coincidence, tax filers in Georgia taking extensions to October 15 will also get a few extra days. October 15 is a Saturday so the extended tax deadline rolls over to the following Monday -- October 17, 2011.

Home Affordability Peaked Last Quarter; Purchasing Power Sinks 10%

Home affordability reached an all-time high in 2010's last quarter. Unfortunately for home buyers in Georgia , it's been a different story since, however.

As mortgage rates cratered, and with home values soft, the Home Opportunity Index reached its highest level in 20 years. The index is published by the National Association of Home Builders. 

Close to 74 percent of the new and existing homes sold between October-December 2010 were affordable to families earning the national median income of $64,400. It's the 8th straight quarter in which the Home Affordability Index surpassed 70 percent.

Prior to 2009, the HOI rarely topped 65 percent.

That said, though, as with everything in real estate, home affordability is a local event. For example, take the Elkhart/Goshen area of northern Indiana. 97 percent of homes sold there last quarter were affordable to families making the area's median income. 

This level of affordability is likely related to state capital Indianapolis, a perennial top-scorer itself.

For the second straight quarter -- and the 22nd time dating back to 2006 -- Indianapolis led all major metropolitan areas with a 93.5 affordability rating.

Meanwhile, on the opposite end of the home affordability spectrum, the "Least Affordable Major City" title went to the New York-White Plains, NY-Wayne, NJ area for the 11th consecutive quarter. Just 25.5 percent of homes were affordable to households earning the area median income.

It's a a 6-point improvement from Q2 2010, however.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, it's important to remember that rising mortgage rates this year have made homes less affordable in all markets across the United States. We won't see a repeat record in this quarter's HOI once it's calculated and published.

Home buyers in Atlanta have lost 10% of their purchasing power since November, and mortgage rates look poised to rise even more.

If your plans call for buying a home later this year, consider moving up your time frame. The long-term costs of homeownership are rising, and affordability, therefore, is falling.

Military Personnel Can Still Claim The $8,000 Homebuyer Tax Credit

For certain members of the military, and for certain federal employees, there's just 2 months remaining to get use the federal home buyer tax credit.

Eligible persons include members of the uniformed services, members of the Foreign Service, and intelligence community employees who served at least 90 days of qualified, extended duty service outside of the United States between January 1, 2009 and April 30, 2010.

Spouses of persons meeting the above criteria are eligible as well.

The federal home buyer tax credit ranges up to $8,000 for first-time home buyers, and up to $6,500 for existing homeowners. Existing homeowners must have lived in their "main home" through 5 of the last 8 years to be eligible.

Claiming the federal tax credit is a two-step process. First, eligible persons must be under contract for a new home on or before April 30, 2011.  The home's closing must then occur on or before June 30, 2011. 

The IRS does not make date exceptions.

Furthermore, both the buyer(s) and the subject property must meet certain minimum eligibility requirements:

• The home may not be purchased from a parent, spouse, or child
• The home may not be purchased from an entity in which the seller is a majority owner
• The home may not be acquired by gift or inheritance
• Each buyer must meet tax credit eligibility standards
• The home sale price may not exceed $800,000
• Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers

The complete program description is published on the IRS website.

Another important note is that the IRS is giving eligible buyers a tax credit as opposed to a deduction.  This means that a taxpayer qualifying for the full $8,000, and for whom the "normal" 2011 federal tax liability is $8,000, will have zero federal tax liability in 2011.

For additional information regarding your tax credit eligibility, call an accountant. Speaking with a tax professional is often worth the cost.

FHA : Monthly Mortgage Insurance Premiums To Rise April 18, 2011

For the third time in 12 months, the FHA is changing its mortgage insurance costs. 

Effective for all FHA case numbers assigned on, or after, April 18, 2011, annual mortgage insurance premiums (MIP) will increase 25 basis points.

The change will add $250 to an FHA-insured homeowner's annual loan costs per $100,000 borrowed, and applies to all borrower's equally. Current FHA borrowers are unaffected.

To understand the FHA is to understand why premiums are rising.

As an institution, the Federal Housing Administration plays a much larger role in the U.S. housing market today than it did just 5 years ago. According to its own records, the FHA's percentage of purchase money business in Georgia and nationwide expanded from 4 percent in FY 2006 to 19 percent in FY 2010.

Rapid growth like this has strained the FHA's capital and, indeed, in its official statement, the FHA alludes to this, stating that the MIP increase will "significantly strengthen" its reserves. By law, the FHA must maintain a certain minimum level of reserves.

FHA mortgage insurance varies by loan term, and by loan-to-value and, beginning April 18, 2011, the new insurance premiums are as follows:

• 15-year loan term, loan-to-value > 90% : 0.50% per year
• 15-year loan term, loan-to-value <= 90% : 0.25% per year
• 30-year loan term, loan-to-value > 95% : 1.15% per year
• 30-year loan term, loan-to-value <= 95% : 1.10% per year

To calculate your monthly mortgage insurance premium, multiply your starting loan size by your insurance premium, and divide by 12. 

There is no change planned to the 1 percent upfront mortgage insurance premium charged by the FHA.

Make A Mortgage Rate Plan BEFORE Friday's Jobs Report

Mortgage rates could move higher beginning tomorrow morning. The Bureau of Labor Statistics releases its February jobs report at 8:30 AM ET.

Home buyers and rate shoppers in Atlanta would be wise to take note. The jobs report is almost always a market-mover.

Consider last month.

Although net job creation fell well-short of expectations in January -- just 36,000 jobs were added -- the national Unemployment Rate dropped to 9.0%, its lowest level in 2 years. The marked improvement surprised economists and sparked inflationary concerns within the investor community.

This, in turn, caused mortgage rates to rise.

In the days immediately following the jobs report's release, conforming rates across Georgia jumped 0.375 percent. That's equivalent to a mortgage payment increase of $22 per month per $100,000 borrowed.

A similar spike could occur tomorrow.

Wall Street scrutinizes job growth because with more working Americans, there's more consumer spending, and consumer spending accounts for 70% of the U.S. economy. A blow-out number tomorrow would change expectations for the future, and lead rates higher again.

The economy shed 7 million jobs between 2008 and 2009 and has barely made 1 million of them back. Tomorrow, analysts expect to see 183,000 jobs created. If the actual reading is lower-than-expected, mortgage rates should fall and home affordability will improve.

Anything else and mortgage rates should rise. Likely by a lot.

Therefore, if you're shopping for a mortgage right now, consider your risk tolerance. Once markets open tomorrow, you can't get today's rates.

Ignore The Case-Shiller Index; Focus On The Future Instead

Last week, Standard & Poor's released its Case-Shiller Index for December 2010. The index is a home valuation tracker, meant to meausure the change in home prices from one period to the next.

December's Case-Shiller Index showed major devaluations nationwide. As compared to December 2009, on a year-over-year basis, home values fell in 18 of the Case Shiller Index's 20 tracked markets, and the U.S. National Index dropped 4 percent overall. 

The retreat puts December's home values at similar levels as compared to early-2003.

That said, buyers and sellers would be wise to take the findings lightly. The Case-Shiller Index is inherently flawed. As such, its results are neither practical -- nor relevant -- to everyday Americans.

There are 3 Case-Shiller flaws, in fact.

The first flaw is the index's limited sample set. Wikipedia lists 3,100+ municipalities nationwide and we can be certain that real estate is bought and sold in all of them. The Case-Shiller Index, however, measures just 20 of them. That's less than 1% of all U.S. cities. And then, within those tracked cities, Case-Shiller reports an average, lumping disparate neighborhoods and streets into one big number.

The "national figures" aren't really national, and the "city data" doesn't apply to your home, specifically.

The second Case-Shiller Index flaw is how it measures home value changes. The index only consider at "repeat sales" of the same home, so long as that home is a single-family, detached property. Condominiums, multi-family homes, and new construction are ignored in the Case-Shiller Index.

Because distressed properties account for such a high percentage of resales lately -- 36% in December --foreclosures and short sales skew Case-Shiller Index worse.

And, lastly, the Case-Shiller Index is flawed by "age". Because it reports closed sales a 60-day delay, December's Case-Shiller Index is measuring the values of home sales contracts from September and October. The Case-Shiller Index, therefore, is a snapshot of the not-so-recent past, and does little to tell us about the next 60 days.

Overall, the Case-Shiller Index is helpful tool for economists and policy-makers, but it doesn't do much good for individual homeowners across the city of Atlanta or anywhere else. For accurate, real-time housing data in your local market, talk to a real estate professional instead.

Pending Home Sales Drop For Second Straight Month

After a strong run to close out 2010, the market for home resales softened a bit in January.

On a seasonally-adjusted basis, the Pending Home Sales Index dropped 3 percent last month, and December's figures were revised downward for a loss, too, according to the National Association of REALTORS®.

A "pending home sale" is defined as a home under contract to sell, but not yet closed. 

The forward-looking index is now at a 3-month low on a national level, but still well ahead of its rolling 6-month average.

Unfortunately, national data isn't overly helpful for buyers and sellers of real estate. The National Association of REALTORS® knows this, of course, and makes an effort to get more granular, supplementing the Pending Home Sales Index report with a region-by-region breakdown. 

Between December and January, only the South Region increased in sales volume. The Midwest led the losers:

• Northeast Region: -2.4%
• Midwest Region : -7.3%
• South Region : +1.4%
• West Region : -5.2%

Even still, however, regional data remains too broad to be practical. The South Region, for example, is comprised of multiple states with thousands of cities and town. The housing market dynamics of a specific neighborhood in a specific regional city will differ from that of another neighborhood in another regional city.

Real estate data must be local to be relevant.

Overall, then, what may be most telling from January's Pending Home Sales Index is how weather can influence results.

Most of the country faced drastic weather conditions in January, ranging from raging snowstorms to bitter cold. Events like that tend to put a damper on home sales, a contributing factor in why the number of new contracts fell.

Another reason is rising mortgage rates. Conforming and FHA rates rose week-by-week in January, robbing home buyers of 10% of their purchasing power. This, too, can slow down purchase activity as buyers adjust their expectations.

Looking forward, we should expect the Pending Home Sales Index to resume rising. Inclement weather doesn't kill demand; it just delays it. And mortgage rates have settled somewhat. These two factors should help release pent-up demand just as the Spring Homebuying Season gets underway.

As more buyers enter the market, negotiation leverage will shift to home sellers, pressuring Atlanta home prices higher. The lowest prices of the year -- and the cheapest financing -- could be what you see today.

The Psychological Tactics That Supermarkets Use On Customers

More than 50% of supermarket purchases are "impulse buys". You may not have known that, but the supermarkets do. And they've built their stores accordingly. A fool and his grocery cart are soon filled to the brim.

In this 6-minute video from NBC's The Today Show, you'll learn how supermarkets use everything from packaging to placement so that customers spend more of their money with each store visit.

Among the supermarkets' tricks:

• Placing flowers and bakery at the front of the store to "make you salivate"
• Specific "deal wording" (e.g. Buy 5 for $5.00) meant to entice larger purchases
• Placing staples on top and bottom shelves, leaving middle shelves for impulse products

The piece also recommends shopping a supermarket in a clockwise-fashion. It helps you spend less time in the store.

We're all mindful of our household budgets. Watch this video to save more money on your next trip for groceries.

New Home Sales Crater In January, Opening The Door For Deals With Builders

Not all housing reports are sunny, it seems.

In its monthly New Home Sales release, the U.S. Department of Commerce showed a 13 percent drop-off in annualized new construction sales between the months of December and January.

It's the biggest one-month drop in New Home Sales since May 2010.

In addition, the supply of new homes for sale spiked higher to 7.9 months last month.  "Home supply" is defined as the amount of time it would take to sell the complete "for sale" inventory at the current pace of sales.

In December, the supply measured just 7.0 months,

Don't fret the news, however. For buyers of new construction in Atlanta , falling New Home Sales figures can be terrific. Weaker markets put pressure on the nation's home builders to sell their respective homes more quickly. To reach that goal, builders often discount prices and/or offer free upgrades to buyers. 

Some of that action may already be in effect.

Despite falling volume, the New Home Sales report showed that new homes are selling faster than in recent months. The median time required to sell a newly-built home dropped to 7.8 months in January -- a figure well below January 2010's reading of 13.9 months.

It suggests that builders are getting better at locating buyers, and moving property.

Therefore, if you're shopping for a new construction and see one worth buying, get to it. Not only will the home likely sell soon if it's priced right, but an increase in mortgage rates will make the home more expensive to finance.

Every 0.250% increase to rates adds $15 monthly per $100,000 borrowed.

Existing Home Supply Down 40% In Last 6 Months

Home resales rose another 2.7 percent last month, according to the National Association of REALTORS® monthly Existing Home Sales report.

An "existing home" is a home that's been previously occupied and is not considered new construction.

The number of existing homes sold on a rolling 12-month basis is now at its highest point since May 2010, the month before the federal homebuyer tax credit ended. It's also up some 40% since July 2010, the month after the tax credit ended.

But that's not the biggest story in the Existing Home Sales report. The precipitous decline in home inventory deserves more attention.

At the current pace of sales, the complete, national home resale inventory will be sold in 7.6 months. This is close to 5 months faster as compared to last year's peak, and well below the 2-year home supply average of 9.0 months. There more buyers in the market, it seems, and fewer homes from which they can choose.

Total home resale inventory is down to just 3.38 million homes nationwide -- the fewest in 12 months.

There were other interesting statistics in the official Existing Home Sales report, including a break-down of purchases by buyer-type.

• First-time buyers accounted for 29% of purchases, down from 33% in January
• Repeat homebuyers accounted for 48% of purchases, up from 47% in January
• Investors accounted for 23% of of purchases, up from 20% in January

In addition, distressed sales -- foreclosures and short sales -- made up 37 percent of the market.

Over the next few days, more housing data will hit the wires and it's expected to show similar strength to January's Existing Home Sales report. With falling supplies and a growing base of move-up buyers, home prices in Atlanta and around the country are expected to rise in the coming months ahead.

Cost of Living Reaches An All-Time High, Pressures Mortgage Rates Higher

Mortgage rates are up 0.875% since mid-November, causing home buyer purchasing power across Atlanta to fall more than 10 percent since.

Persistent concerns over inflation are a major reason why and this week's Consumer Price Index did little to quell fears. CPI rose for the third straight month last month.

Wall Street was not surprised.

As the economy has picked up steam since late-2010, the Federal Reserve has held the Fed Funds Rate near zero percent, and kept its $600 billion bond plan moving forward. The Fed believes this is necessary to support the economy in the near-term. 

Over the long-term, however, Wall Street worries that these programs may cause the economy may expand too far, too fast, and into runaway inflation.

Inflation pressures mortgage rates to rise.

Inflation is an economic concept; defined as when a currency loses its value.  Something that used to cost $1.00 now costs $1.05, for example. It's not that the goods themselves are more expensive, per se. It's that the money used to buy the goods is worth less.

Because of inflation, it takes more money to buy the same amount of product.

This is a big deal in the mortgage markets because mortgage rates come from the price of mortgage bonds, and mortgage bonds are denominated, bought, and sold in U.S. dollars. When inflation in present, the dollar loses its value and, therefore, so do mortgage bonds.

When mortgage bonds lose value, mortgage rates go up.

Inflation fears are harming Georgia home buyers. The Cost of Living has reached a record level, surpassing the former peak set in July 2008. Mortgage rates would be rising more right now if not for the Middle East unrest.

So long as inflation concerns persist, mortgage rates should trend higher over the next few quarters. If you're wondering whether to lock or float your mortgage rate, consider locking today's sure thing.

Going On Vacation? Don't Tell The Burglars!

Want to help keep your home safe from burglars while on vacation? One smart way is to refrain from announcing your plans on various social networks such as Facebook. 

There's other common-sense tips, too, as shared in this 4-minute video from NBC's The Today Show.

Drawing from a series of interview with former convicts, you'll learn that there's more to keeping your home safe than just locking the doors and windows, and setting the alarm system for "away". You'll also want to make sure your home looks "lived in".

And some of these tricks you may have never thought of. 

For example, while on vacation:

• Make sure a neighbor is picking up your mail and newspapers daily
• If it snows, have a friend drive tracks in your driveway, or shovel it clean
• Set inside lights to a timer, giving the appearance someone being home

In addition, if you don't have a safe for valuables, consider moving them to a child's room. It's among the last places a burglar looks.

You can't make your home 100% safe from intruders but you can make your home a tougher target. Just use some common sense and follow the tips in the video.

Fed Minutes Show Lower Unemployment And Higher Growth For 2011 and 2012

The Federal Reserve released its January 25-26, 2011 meeting minutes Wednesday afternoon. Georgia mortgage rates have been in flux since.

Fed Minutes are comprehensive recaps of Federal Open Market Committee meetings; a detailed look at the debates and discussions that shape our nation's monetary policy. As such, they're released 8 times annually; 3 weeks after the most recent FOMC meeting.

Fed Minutes can be viewed as the unabridged version of the succinct, more well-known "Fed Statement" that's released to markets immediately post-adjournment.

Just how much more lengthy are Fed Minutes?

• The January 25-26, 2011 statement contains 395 words
• The January 25-26, 2011 meeting minutes contains 6,916 words

If the Fed Statement is an executive summary, the Fed Minutes is a novel. And, the extra words matter.

When the Federal Reserve publishes its minutes, it's offering clues about the group's next policy-making steps.  As an example, in the January minutes, the Fed improved its outlook for economic growth; lowered its projections for the Unemployment Rate; and removed its concern for deflation.

In addition, the Fed discussed the potential for food-and-energy-cost-induced inflation, but labeled it as a minor economic risk at this point in time.

Bond markets are mixed on the text of the Fed Minutes.

Although the Fed indicates a willingness to allow inflation to occur, it appears ready to act in case inflation goes too high. One way that the Fed responds to rising inflation is to raise the Fed Funds Rate and many economists believe this will start happening by late-2011 or early-2012.

Single-Family Housing Starts Fell In January, Despite What The Headlines May Have Told You

Annualized Single-Family Housing Starts dropped 1 percent in January to 413,000 units nationwide, it's lowest reading almost 2 years.

A "Housing Start" is defined as a home on which construction has started. 

Now, if you had only seen the Housing Starts story in the headlines today, you wouldn't have known that single-family starts fell at all. It's because of how the story is being reported.

Most commonly, newspaper headlines are reading something similar to "Housing Starts Jump 14.6%" with the lead paragraph making mention that "housing starts are at their highest levels in 4 years".

It's a true statement, but it's misleading, too.

This is because, despite the Census Bureau reporting Housing Starts by property type -- single-family, multi-family, and apartments -- the media often lumps them into a single data set.

It's a categorization that helps investors in homebuilder stocks, but it does little for everyday Atlanta home buyers. The huge majority of buyers aren't buying multi-units or whole apartment buildings -- they're buying 1-unit homes.

Here's how January's Housing Starts broke down by type:

• Single-Family Homes : Down 4,000 units, or -1%
• 2-4 Unit Homes : Negligible change
• Apartment Buildings : Up 46,000 units, or +80%

Clearly, the surge in Housing Starts can be attributed to the rapid rise in the 5-unit-or-more sector. Single-Family Starts were weak, by comparison.

Even with all of this noted, however, we can't even be certain that the January Housing Starts data is accurate anyway. A footnote in the government's report shows that, although single-family starts are said to have decreased 1 percent, the data's margin of error is ±8.6%.

This means that the true Single-Family Housing Starts reading may be anywhere from -9.6% to +7.6%. The data is throw-away. Housing Starts may have actually increased in January, but we won't know until revisions are offered later this year.

Home Builders Report Higher Sales Levels In January

Homebuilder confidence in the market for newly-built, single family homes appears stable as the spring buying season gets underway in Atlanta.

The confidence reading is recorded and reported monthly by the National Association of Homebuilders. For the 4th straight month, the group's Housing Market Index reads 16.

As a market indicator, Housing Market Index has been tracked for more than twenty years and reports on a 1-100 scale. A value of 50 or better indicates "favorable conditions" for home builders.

HMI hasn't read higher than 50 since April 2006.

Broken down, the Housing Market Index is actually a weighted composite of 3 separate surveys measuring current single-family sales; projected single-family sales; and foot traffic of prospective buyers.

February's surveys showed slight improvement as compared to January, overall.

• Single-Family Sales : 17 (+2 from from January)
• Projected Single-Family Sales : 25 (+1 from January)
• Buyer Foot Traffic : 12 (unchanged from January)

It's notable that the current sales levels were higher in February, and that projected sales levels for the next 6 months are higher, too.

For home buyers Georgia across , this month's Housing Market Index reading may foreshadow tougher negotiations in the months ahead with builders. The likelihood of getting discounts and free upgrades may be diminished as builders see their respective sales levels grow, and as the economy expands.

Coupled with rising mortgage rates, home buyer purchasing power may never be as high as it is today. 

Therefore, if your plans call for buying a newly-built home this year, think about moving up your time frame. Builder confidence appears to have bottomed. As it rises, so should home prices.

Retail Sales Rise For 7th Straight Month; Mortgage Rates Worsen

If consumer spending is a keystone element in the U.S. economic recovery, a full-on rebound is likely underway.

Tuesday, the Census Bureau released its national January Retail Sales figures and, for the seventh straight month, the data surpassed expectations. Last month's retail figures climbed 0.3 percent as total sales receipts reached an all-time high.

It's good news for the economy which is scratching back after a prolonged recession, but decidedly bad news for people in want of a mortgage across the state of Georgia. This includes home buyers and would-be refinancers alike.

Because consumer spending accounts for the majority of the U.S. economy, Retail Sales growth means more economic growth and that draws Wall Street's dollars toward riskier investments, including equities, at the expense of safer investments such as mortgage-backed bonds.

On the heels of the Retail Sales report's release, bond prices are falling this morning. As a consequence, mortgage rates are rising. It's the same pattern we've seen since mid-November -- "good news" about the economy sparks a stock market frenzy, casuing mortgage bonds to rise.

A sampling of other recent good-for-the-economy stories include:

• Corporate earnings are rising quickly (Marketwatch)
• Existing Home Sales up 12% month-over-month (CNN Money)
• The Fed says the economy looks "brighter" (Bloomberg)

The days of 4 percent, 30-year fixed rate mortgages are over. 5 percent is the new market benchmark. Unless the economy keeps showing strength. Then, that number may rise to six percent.

If you're thinking of buying or refinancing a home, consider how rising rates will hit your budget. You may want to take that next step sooner than you had planned -- if only to protect your monthly payments.

How To Replace And Install A New Kitchen Faucet

Want to replace your kitchen faucet? It's a job for which you could hire a plumber, or, with just a little bit of craftsman skill, it's a project you could finish yourself.

Watch this video from the Lowe's YouTube channel. You'll get step-by-step instruction on how to take out an old faucet and how to install a new one. The supplies you'll need are minimal, too.

In 3 minutes, the video covers:

• How to shut the kitchen water supply off and drain residual water from the pipes
• How to detach and remove the old kitchen faucet
• How to align the new faucet and reconnect to the water lines

There's some good tips along the way, too, including how to make sure you don't accidentally connect the hot water supply to the cold-water faucet.

If you're uncomfortable working with your home's plumbing and would like a referral to a plumber , please just ask. I'm happy to help how I can.

Mortgage Rates Return To April 2010 Levels

Mortgage rates are surging.

Over the last 7 days, conventional, 30-year fixed rate mortgage rates have jumped 24 basis points, or 0.24%, according to Freddie Mac's weekly Primary Mortgage Market Survey.

It's the largest 1-week spike in mortgage rates in recent history.

The 30-year fixed rate mortgage now averages 5.05% nationally. This is much, much higher than what we saw last November when mortgage rates were 4.17% and looked headed to the 3s.

That's not the case today. In fact, it's the opposite. 

Mortgage rates have risen quickly and fiercely this year. As of this morning, mortgage rates are higher over 9 consecutive days, marking the longest mortgage rate losing streak in the last 6 years, at least.

Note, however, that when you call your loan officer or bank, you may not be quoted the same 5.05% rate as shown by Freddie Mac. This is because Freddie Mac-reported rates are national averages. Any given mortgage rate may be higher or lower depending on its region. 

As an illustration, look how this week's rates breaks down by area:

• Northeast : 5.07 with 0.7 points
• Southeast : 4.99 with 0.9 points
• North Central : 5.09 with 0.6 points
• Southeast : 5.06 with 0.6 points
• West : 5.02 with 0.8 points

In other words, the rate-and-fee combination you'd be offered in your home town of Atlanta is different from what you'd be offered if you lived somewhere else. In the Southeast, rates tend to be low and fees tend to be high; in the North Central U.S., it's the opposite.

The good news is that, as a mortgage applicant, you can have your pricing whichever way you prefer. If getting the absolute lowest mortgage rate is what's most important to you, have your loan officer structure your loan as in the "Southeast Style". Or, if you prefer to have as few closing costs as possible and don't mind slightly higher rates, ask for that type of set-up instead.

Either way, consider locking your rate as soon as possible. If rates keep rising, it won't be long before they touch 6 percent.