Moving To A New Town Means Adjusting To A New Cost Of Living

March 13, 2007

For the budget-aware, buying a new home involves calculating how new PITI payments will impact the household budget. For in-town moves, the math is fairly simple — consider your existing budget and replace your old housing cost with your new housing cost. For non-local moves, however, the budgeting grows more complicated because each city has […]

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The Week In Review (March 12, 2007) : What To Watch For

March 12, 2007

The mounting pressure on sub-prime lenders sparked talk of a recession as economists wonder how the housing market will be impacted. Many sub-prime lenders discontinued 100% financing programs this past week and a few of the biggest names — New Century and Fremont — stopped taking applications altogether. These changes pushed mortgage rates lower through […]

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More Americans Are Working And Are Being Paid More To Work

March 9, 2007

Mortgage rates are moving higher this morning after the 8:30 EST release of February’s jobs report. The 97,000 new jobs created was in-line with the 95,000 expectation, but January’s numbers were revised higher by 35,000 to 146,000. In addition, the report showed a slight drop in unemployment and an increase in average hourly earnings. If […]

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Sub-Prime Changes Freeze Out Homeowners

March 8, 2007

The snowballing in sub-prime lending is becoming an avalanche. Effective today, many lenders have discontinued 100% financing programs and other “piggyback” scenarios.  These types of loans represented the widest doors to homeownership for Americans in recent years. There are several reasons why a home loan applicant may be considered “sub-prime”, but the most common reason […]

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Like Me And You, Sub-Prime Lenders Have Credit Limits

March 7, 2007

Turbulence in the sub-prime lending market forced several big name lenders to shut their doors to business in recent weeks. In a healthy sub-prime environment, institutional investors buy mortgages in large bundles called “pools” from sub-prime lenders. The current environment is not healthy, however.  Loans are defaulting more quickly than in the past and investors are […]

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Two Extra Days To File Taxes Means Two Extra Days To Find Deductions

March 6, 2007

Many of us are knee-deep in paperwork from our banks, our advisors and lenders as we prepare for the April 17, 2007 tax deadline. Yes, I said April 17, 2007. April 15 is a Sunday and April 16 is Emancipation Day, a legal holiday in the District of Columbia.  So, this year, we all have […]

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The Week In Review (March 5, 2007) : What To Watch For

March 5, 2007

Two weeks ago, the tone on Wall Street was overwhelmingly positive and the glass was half-full.  Last week, however, that all changed. The week began with former Fed Chairman Alan Greenspan’s remarking that a 2007 recession may be looming, and it ended with Dow posting its worst one week loss in more than four years. […]

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Fed President Poole Says “There Could Be A Recession”

March 2, 2007

Speaking in Chile this morning, St. Louis Fed President William Poole said that while “there could be a recession” in the coming months, the Fed is not expecting it. This echoes Ben Bernanke’s speech earlier this week in which he stated that the U.S. economy still has room for growth. Poole’s comments are soothing markets […]

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Sharing Your Credit Card Balances Can Lower Your Mortgage Rates

March 1, 2007

Typically, higher credit scores get lower mortgage rates and access to a wider array of mortgage products. Extent of Indebtedness comprises 30% of a credit score and is the second largest component in the credit scoring model.  In plain-speak, Extent of Indebtedness is: “How close is this person to maxing out his cards?” The ideal […]

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What’s Bad For Stocks Can Be Good For Rates

February 28, 2007

After the most major meltdown in U.S. stock trading since September 17, 2001, markets appear to be recovering this morning. This should reverse the drop in mortgage rates we saw towards the end of the day yesterday. To understand why mortgage rates go down when stock markets suddenly fall, we must look at the investor’s […]

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More “Safe Haven” Buying Drops Mortgage Rates

February 27, 2007

The Flight-to-Quality continues in the bond markets. Iran said today that the suspension of its uranium enrichment program “will never happen”, fueling speculation that an international stand-off is pending.  The United States has sent additional aircraft carriers to the Gulf in response. Normally, this action is enough to frighten markets into bonds by itself, but […]

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The Week In Review (February 26, 2007) : What To Watch For

February 26, 2007

Aside from CPI, last week was quiet on the economic data front.  Traders used the week to catch their breath and look around a bit at market conditions.  They liked what they saw and strong demand for bonds pushed mortgage rates down. This week, the big Market Mover Day is Thursday, coinciding with the release […]

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How Iran’s Uranium Enrichment Program Changes Mortgage Rates

February 23, 2007

In defiance of the UN Security Council, Iran is taking another step towards successfully building a nuclear weapon. Yesterday, it was reported by the International Atomic Energy Agency that Iran expanded its ability to create nuclear weapons and that it plans to “turn on” at least 1,000 uranium-enrichment centrifuges. Internationally, this decision creates questions (and fears) about […]

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How Decimal Points Mess With Markets

February 22, 2007

A little known fact about yesterday’s CPI numbers: they weren’t as inflationary as you would have otherwise thought.  It all comes down to decimals and rounding. What The Expectations Were CPI: 0.1% increase in January Core CPI: 0.2% increase in January What The Headlines Reported CPI: 0.2% increase in January Core CPI: 0.3% increase in January […]

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CPI Is Higher And Contained In Comfort Range

February 21, 2007

Markets did not like today’s Consumer Price Index figures which came in higher than expected.  However, the downbeat mood this morning is not enough to reverse the recent downward trend in mortgage rates. The chart at right shows CPI over the past two years and the band collars the Fed’s articulated “comfort zone” for inflation. […]

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The Week In Review (February 19, 2007) : What To Watch For

February 19, 2007

Fed Chairman Ben Bernanke carried the biggest stick in the mortgage rate market last week.  His “Goldilocks” testimony before the Senate Banking Committee spoke of favorable growth and subsiding inflation. Markets expected a harsher tone from Bearded Ben and that is why rates dropped post-testimony — the expectation diminished that the Fed will raise the […]

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Why Long-Term Mortgage Rates Are The Same As Short-Term Mortgage Rates

February 16, 2007

Interest rates are currently inverted, a market situation in which the longer you commit to lending your money, the less your return on investment.  It’s counter-intuitive so let’s delve a little deeper. Imagine if a friend asked you to borrow money for two years and you charged him interest on that money.  There are some […]

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Why Nations Care What Ben Bernanke Says To The U.S. Congress

February 15, 2007

The markets continue to show their appreciation for Fed Chairman Bernanke’s testimony yesterday and mortgage rates are falling in response. So, why do the Chairman’s words hold such sway over global markets?  Simple.  Buying and selling U.S. dollar-denominated securities is an integral part of central banking fiscal management policies worldwide.  When the Chairman says that […]

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Markets React To Bernanke’s Testimony

February 14, 2007

Addressing the Senate Banking Committee this morning, Fed Chairman Ben Bernanke gave the speech that most people expected: The current monetary policy (read: Fed Funds Rate) is at a level that both sustains economic growth, and tempers inflation pressures. In addition, inflation expectations “appear to have remain contained,” Bernanke said.  He called that “encouraging” and […]

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North Korea Stops Making Plutonium, But Will Markets Believe Them?

February 13, 2007

North Korea agreed to shutter its main source of plutonium today in exchange for energy and food considerations after months of negotiations with the United States and other countries.  The agreement did not specifically address the disarmament of existing nuclear weapons. News like this is a mixed bag for mortgage rate shoppers based on how […]

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