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Speaking of your home, you’re probably aware that home insurance premiums seem to cost you more each year. But you may not have investigated how you can help cut those costs. The second article below provides information to help you make smart decisions and get the most for your homeowners insurance money.
As always, this information may be useful to your friends, family members, and coworkers. So feel free to forward this to them or email me to set them up with their own free copy. And if you need any assistance this summer, simply call or email.
“Summerize” Your Home with These Projects
It may seem hard to believe, but we’ve already waved goodbye to the beginning of summer. Before the hottest days of late summer descend upon us, consider tackling these summer projects:
Air conditioning-It’s important to have your air conditioner in perfect working order. Taking care of any issues in the midst of a heat wave can potentially result in an increase in price, as well as an increase in the time it takes for a technician to visit your home. You should also replace any filters now. Simply remove the old one and take it to your local home improvement center. Sales representatives should have no problem finding its replacement.
Clean out your garage-Organizing a garage can be an excruciating experience during the hottest time of summer, so if that’s something you need to do, check the upcoming weather reports and plan accordingly. Once you clean out your garage, either donate any unwanted items or sell them.
Paint-Summer is an ideal time to paint the interior of your home since the weather best lends itself to keeping your windows open, allowing the fresh air in and the paint fumes out. If you decide to paint the inside of your home, think about lightening the existing color as opposed to darkening it. Lighter colors are not only inviting, they create the illusion of a bigger, more open space.
Buy fans-Installing ceiling fans and using portable fans are great methods for cutting the heat inside your home. They are also far less expensive to use than an air conditioner. Using fans of any kind also enables you to keep windows open at night, allowing fresh air to circulate throughout the house.
Install dimmer switches-Dimmer switches not only add ambience, they also cut down on energy and the unwanted heat given off by brighter bulbs. Another tip is to use low-wattage light bulbs whenever possible.
Good luck and happy “summerizing!”
Homeowner’s Insurance: How to Get the Most for Your Money
What do the following slogans remind you of?
“You’re in good hands with…”
“Like a good neighbor…”
“Own a piece of the rock.”
That’s right, insurance. And premiums are costing us more and more every year. But there may be some savvy steps you can take to trim the bill and still have your valuables in good hands.
Items that push premiums higher include a pool with a slide or diving board, having a trampoline, or even a dog that has a record of biting others. These factors could be part of higher premium costs, so contact your insurance agent and see if changes can reduce your premium payments.
There are also interior items that can impact the cost of insurance. The coziness of the wood-burning stove may be appealing to the homeowner, but to the insurance agent it could look like a fire hazard, and result in a higher premium.
If you have not done so already, investing in a good alarm system may enable you to shave some of the cost of insurance, while giving you some added protection. And be sure to ask your insurance agent about combining auto and home policies since this could help trim the overall cost of your insurance bill, too.
Often times, once the insurance policy is purchased it sits in a drawer until the need arises to file a claim. But taking the time to review your personal insurance policy, just once a year, provides the opportunity to lower the overall annual premium and make sure your valuables are adequately protected. It is also the perfect time to make any additions for personal possessions that may have been purchased or acquired during the year, like art, home furnishings, and jewelry.
Additionally, if the home has been remodeled discuss the upgrades that have been made with your insurance agent to ensure that all upgrades are covered in the policy.
Remember, if you need a recommendation to a great insurance agent, just give a call!
They say no news is good news. But perhaps the more important question this week is will the Fed’s news from their latest Federal Open Market Committee Meeting be good news for rates and the economy? Here’s what you need to know.
Last week, the Fed released their Interest Rate and Policy Statement after their latest regularly-scheduled meeting of the Federal Open Market Committee. While there was speculation ahead of time that the Fed may decide to buy more longer-term Treasuries, which could jumpstart the cycle needed to eventually bring home loan rates down, the Fed did not make any changes to the Fed Funds Rate or their Bond purchase program. The one change from the prior meeting’s statement was that the Fed now does not see deflation as a risk. While this is good news, it also means that there could be a real threat of inflation down the road. And remember, inflation is bad for Bonds and home loan rates, so this could have a big impact on rates in the longer term!
There was good news in the Personal Income Report as personal income rose in June by its biggest gain in over a year. The increase in income led to higher consumer spending and savings in June. Spending rose for the first time in three months, while the savings rate climbed to its highest level since December 1993 as the chart below shows.
———————– Chart: Personal Savings Rate 1990 to 2009
Keep in mind that a high savings rate is a double-edged sword … it’s good to see people saving, but spending is the lifeblood of a strong economy.
The Durable Goods Report also brought good news, as did Consumer Sentiment, which was better than expected. Durable Orders came in better than expected for May, led by orders for airplanes and machinery. Although one report doesn’t make a trend, the reading is encouraging and may signal that the economic slump is starting to ease.
But there was still disappointing news on the housing and job market fronts. Both New and Existing Home Sales came in below expectations and Initial Jobless Claims came in a bit worse than expected, indicating that the job market continues to be weak and slow in stabilizing.
After all the news of the week, Bonds and rates managed to break above important technical levels to end the week .25 percent better than where they began with a little help from some solid Treasury auction results.
FORGETTING SOMEONE’S NAME IS NEVER GOOD NEWS! CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR SOME GREAT MEMORY IMPROVING TIPS.
Forecast for the Week
A holiday-shortened week is ahead, but that doesn’t mean there won’t be any news. Tuesday’s Consumer Confidence Report will show us how consumers are behaving based on recent economic news and may indicate if increased consumer spending is likely to continue.
There will also be important news to note in Thursday’s Jobs Report for June, especially given the mix of good and bad news in May’s Report. On the good side, the number of Jobs lost in May was much lower than expected. However, the unemployment rate (which is determined from a different survey) came in higher than expected.
As mentioned above, last week’s Initial Jobless Claims were worse than expected, so this week’s report will be interesting to see.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds and rates were able to break above an important level with help from the Treasury auctions. I’ll be watching to see if Bonds and rates are able to remain above this level and improve further.
Both the Stock and Bond markets will be closed on Friday, July 3 for Independence Day. Have a safe holiday.
Chart: Fannie Mae 4.5% Mortgage Bond (Friday Jun 26, 2009)
Have you ever been introduced to someone, only to forget her name two seconds after you shake her hand?
Don’t worry. This is NOT evidence that you’re losing your mind. Turns out, it’s actually an extremely common occurrence for many people. The good news is there is plenty of research on the subject and there are a number of simple, practical steps you can take to improve your memory now and long into the future.
With that in mind, here are a couple of great tips for proactively strengthening your memory:
Tip #1: Neurobic Exercise
You know all about the wonderful effects aerobic exercise has on the heart, but have you heard of neurobic exercise for the brain?
According to Lawrence Katz, co-author of Keep Your Brain Alive: 83 Neurobic Exercises, the best exercise for the brain is to force it to form “new patterns of association” or new pathways. In other words, challenge your brain every day. take it off autopilot and make it relearn or create new associations with the most routine activities of your day.
Katz’s book offers numerous examples of small changes you can make to activate your brain, including: brushing your teeth with the other hand; taking an alternative route to work; moving your wastebasket to the other side of your desk; closing your eyes while putting your key in and unlocking the front door; and changing where you and your family members sit at the dinner table.
So if you feel like your memory might be starting to slip a bit, try some of these simple neurobic exercises today!
Tip #2: Mnemonic Drilling
There are actually three steps or stages of memorization: acquisition, consolidation, and retrieval. That means, once we acquire new information, like someone’s name for instance, the way in which we consolidate that data will directly affect how well we’re able to retrieve it from memory.
Whether you’re a visual or auditory type of learner, there are many mnemonic devices that can help you to better organize or consolidate the new information that you need to recall.
Here’s an example of simple steps that might help:
First, associate the data you want to remember with common images. For instance, let’s say you meet someone named Jennifer Green. Imagine Jennifer playing golf, or picture her wearing all green clothes, or imagine her face painted completely green.
Second, think of associations you can use to help you remember this person. For instance, link Jennifer to the quality that best fits her personality (use alliteration and rhymes whenever possible): Jolly Jennifer Green.
Finally, connect sound to your memory by saying the name aloud.
Do this regularly and, before you know it, you’ll never forget anyone’s name again!
The Week’s Economic Indicator Calendar
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of June 29 - July 03
“THE WORLD IS BUT A PERPETUAL SEE-SAW.” Michel de Montaigne. And that sentiment was especially true in the world of Stocks and Bonds last week, as money see-sawed back and forth between the two markets, halting the improvement that Bonds and home loan rates mustered up in the first part of the week.Bonds and home loan rates began the week looking good - and remembering that inflation is bad news for both Bonds and rates, they were helped along by good news on the inflation front. Inflation at the wholesale or producer level remained tame in May, and at a consumer level, inflation readings came in lower than expected, with a year-over-year reading at its lowest level since 1950. These are good signs that inflation hasn’t become an issue yet. However, inflation will be a concern down the road, due to the massive stimulus being injected into the economy. It is said that rates are like a boat floating atop the sea of inflation…as inflation rises, so will home loan rates. If you or someone you know should be acting on today’s still low home loan rates, please get in touch soon.
Also helping Bonds rally in the early part of last week was the fact that the New York State manufacturing index came in weaker than estimates, indicating that the US economy is still very weak. And since bad economic news often causes money to flow from Stocks into Bonds, this piece of news helped Bonds start the week on an improving trend.
However, Bonds and home loan rates reversed course midweek and worsened, as money see-sawed back over to Stocks. They were also pressured to worsen by the enormous amount of Bond supply hitting the markets - as too much supply of anything will naturally cause the price to move lower..and in this case, has caused home loan rates to move higher. As you can see in the chart below, Bonds have worsened when additional supply has been announced, causing home loan rates to climb.
———————– Chart: Fannie Mae 4.5% Mortgage Bond
While the Fed is continuing to purchase Mortgage Backed Securities, their efforts are just not enough to absorb the flood of new closed and securitized mortgages that are hitting the market after the heavy refinance activity recently - not to mention all the Treasury Securities being auctioned in order to pay for all the stimulus plans.
And speaking of activity in the housing market, Housing Starts rose a whopping 17% in May to come in better than expectations. In addition, Building Permits, which are a sign of future construction, also came in better than expected. These are good signs that the affordable home prices, tax incentives and low home loan rates are attracting buyers to the market.
After all the see-sawing action back and forth last week, including a late week rally in Bonds and fizzle in Stocks, home loan rates ended the week slightly higher than where they began.
THERE CAN BE PLENTY OF UPS AND DOWNS WHEN IT COMES TO BUYING A HOME. CHECK OUT THIS WEEK’S SPECIAL MORTGAGE MARKET VIDEO VIEW FOR IMPORTANT INFORMATION THAT WILL HELP EASE THE PROCESS.
Forecast for the Week
The see-sawing motion between Stocks and Bonds will likely be seen during the coming week, as there is plenty of action ahead. After last week’s look at the new construction piece of the housing market, we’ll get more information on housing this week with Tuesday’s Existing Home Sales Report and Wednesday’s New Home Sales Report.Also on Wednesday we will get an update on consumer and business consumption and buying behavior via the Durable Goods Report, which shows data on items that are non-disposable, such as cars, furniture, appliances, games, cameras, business equipment, etc. Thursday brings a read on the economy with the Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity. Also on Thursday is the weekly Initial Jobless Claims report. Last week’s report showed that continuing claims fell by 148,000 to 6.69 million, which is the largest one-week drop since November of 2001. Jobs are vital to the economy strengthening, so it will be important to see what this week’s report indicates.
This week we also have the Fed’s next regularly scheduled Federal Open Market Committee meeting, followed by their Policy Statement and Interest Rate Decision coming on Wednesday afternoon. It will be important to hear the Fed’s comments on the economy and inflation. And speaking of the Fed and inflation, the Fed’s favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) index found within the Personal Income Report, will be released on Friday.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds were unable to maintain the gains they made earlier in the week. I’ll be watching closely to see what impact this week’s news, including additional supply of Bonds hitting the market, will have on Bonds and home loan rates.
Chart: Fannie Mae 4.5% Mortgage Bond (Friday Jun 19, 2009)
The Mortgage Market View…
Don’t Get Dropped By Your Insurance Company!
Buying a home…and making sure all of the details are taken care of…can be overwhelming for any buyer, but especially for first-timers. And this year, lower rates and the $8,000 first-time home buyer tax credit have caused the number of first-time home buyers in the market to rise. Watch this new video from Kiplinger.com that contains five important things all home buyers need to know about home owner’s insurance, including tips to avoid being dropped, tips to avoid a price increase, and things you need to do before you buy a home.
“DON’T TOUCH THAT DIAL.” That familiar broadcasting statement certainly applied to the markets last week, as the volatility continued and the markets changed direction quickly.Take a look at the chart below, which shows how home loan rates have climbed dramatically over the last several weeks. In fact, home loan rates are at their highest levels since the Federal Reserve announced their Mortgage Backed Security purchase plan at the end of 2008. While the chart below is just a rough indicator of present rates that require points and fees to be paid, it’s clear to see the dramatic climb rates have taken in recent days.
———————– Chart: Freddie Mac 30-Yr Fixed Rates
As we’ve mentioned in recent issues of this newsletter, added supply has been one of the main culprits behind the recent sell-off in Bonds and corresponding climb in home loan rates. So where is that supply coming from? First, all those refinances you’ve heard about lately are actually turned into Mortgage Backed Securities after they’re closed, which adds more Bonds to the market. Plus, government spending plans have to be paid for somehow.so record levels of Treasury Securities are being auctioned off these days. Although the Fed has a program to purchase some of these Mortgage Bonds, the number of new Bonds simply outweighs what the Fed is able to buy - therefore driving Bond prices lower and home loan rates higher.
There was some good news for the economy as Consumer Sentiment came in at its highest level in 9 months, and Retail Sales were inline with estimates, marking the biggest rebound for Retail Sales in 4 months. There was mixed news on the Jobs front: While Initial Jobless Claims were below estimates, continuing claims rose to 6.82 million, which is another new record. And US exports fell to the lowest level in almost 3 years, as the US Balance of Trade widened in April for the second month. However, US exports should improve a bit in the coming days, as the US Dollar recently sank against foreign currencies, which makes US goods cheaper and more attractive to buy. The flip side of that coin however, is that since oil is Dollar denominated, the price per barrel rises to compensate for the erosion in the Dollar.meaning higher prices at the pump and elsewhere.
Bonds and home loan rates were able to muster up some improvement on Thursday and Friday, helped in part by news that the Paulson & Co. hedge fund is purchasing distressed debt and Mortgage Backed Securities, which will help alleviate some of the supply mentioned above. However, home loan rates still ended the week .25% to .375% worse than where they began.
Since Bond prices react negatively to any news of economic recovery, it’s important to work with a knowledgeable advisor who monitors the markets every move. Let me know if you have any questions about your situation.
WHEN IT COMES TO BROADCASTING, CHANGE IS IN THE AIR. TUNE INTO THIS WEEK’S MORTGAGE MARKET VIEW FOR IMPORTANT INFORMATION ON THE SWITCH TO DIGITAL TELEVISION.
Forecast for the Week
This week we’ll get dialed into several economic fronts via a variety of reports. First, Tuesday brings a read on the housing market with the Housing Starts and Building Permits Report.Tuesday and Wednesday should also bring us a clearer picture of where things stand on the inflation front Tuesday brings the wholesale price inflation measuring Producer Price Index (PPI) Report, while Wednesday delivers the inflation news on the retail level, via the Consumer Price Index (CPI) Report. Remember: Inflation is the arch enemy of home loan rates, so it will be very important to see what these reports reveal.
Thursday also brings news from the manufacturing sector with the Philadelphia Fed Report. This monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware is one of the most-watched manufacturing reports overall. And with last week’s continuing Jobless Claims reaching another record, this week’s Initial Jobless Claims Report will be another important one to watch.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds were able to rebound and see some improvement late last week, and I’ll be staying tuned to see if Bonds are able to continue in this direction.
Chart: Fannie Mae 4.5% Mortgage Bond (Friday Jun 12, 2009)
The Mortgage Market View…
LIVING IN A “DIGITAL” WORLDOn Friday, June 12, 2009, the nationwide switch to digital television (or DTV) took place. Although the transition has been in the works for a decade, many people still aren’t sure what DTV is or why the government made the switch.
The information below can help clear some of the confusion.
What is DTV?
The “DTV switch” refers to the switch from using analog signals to broadcast stations like NBC, CBS, ABC, and PBS. Essentially, the switch to DTV means that over-the-air analog broadcasts are discontinued and replaced by digital signals. This transition to digital signals is expected to help free up the cluttered airwaves so that additional wireless services can be offered-including important programs like more emergency response services. As an added benefit, digital signals deliver a clearer picture as well as more programming options for consumers.
What’s the Problem?
The problem is that older televisions were not designed to receive and interpret digital signals. So, when digital signals replace analog broadcasts, those televisions go blank-that is, unless they have been converted.
What Does it Mean to You?
Even though the transition date is upon us, some people still aren’t sure what-if anything-they need to do.
So… to be clear: If you have an older analog TV and you use an over-the-air antenna, you need an analog-to-digital converter box to receive the new digital signal.
But don’t panic… you don’t necessarily need to buy a new TV or stare at a blank screen. Just make a trip to your local electronics or department store and ask the clerk where you can find their digital converters.
Now…if you have one of the following, you should be all set:
Cable or satellite service-If you receive your television channels through cable or satellite, you’re already taken care of. You may want to check with your local cable provider to make sure you don’t need extra equipment or a converter box for televisions that plug directly into the cable socket, rather than going through a cable box. Some news stories have reported that those customers need to pay additional fees. So your best bet is to call your local cable provider and ask.
A TV with a digital tuner-If you own a newer TV with a built-in digital tuner, you’re also ready. To find out if your TV has a digital tuner, check your owner’s manual or look for a label on your television that includes the words “digital tuner” or “digital receiver” as well as “DTV” or “ATSC.” Also, if you have a high-definition television (HDTV), you’re good to go. If your TV already has one of these labels on it, you should be all set. If it doesn’t-and you’re considering purchasing a new TV-make sure your next TV does.
To learn more about DTV and the options available to you, visit the government-sponsored DTV website at: https://www.dtv2009.gov/. You’ll find frequently asked questions, info about the transition, and other helpful articles.
The Week’s Economic Indicator Calendar
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of June 15 - June 19
“IT’S A RECESSION WHEN YOUR NEIGHBOR LOSES HIS JOB; IT’S A DEPRESSION WHEN YOU LOSE YOURS.” Harry S. Truman. The big headlines of the week had everything to do with job losses…and some surprising twists within the monthly Jobs Report that arrived on Friday, and caused home loan rates to worsen yet once again. Despite their efforts to improve early in the week, Bonds and rates ended the week .375% to .5% worse than where they began.Friday’s Jobs Report showed that 345,000 jobs were lost in May, far better than expectations for 520,000 jobs lost. And adding to the positive tone were revisions to the two prior months, showing 82,000 fewer jobs lost than previously reported. So all in all, about 260,000 fewer jobs lost than had been forecast. But let’s take a closer look.
———————– Chart: Non-Farm Payroll
Despite the positive news in the estimated number of jobs lost, the official Unemployment Rate, which is regarded as a more reliable indication of the employment situation, actually came in higher than expectations, climbing from 8.9% in April to 9.4% in May…and this wouldn’t seem to make sense, given the decline in job losses, so what caused this apparent discrepancy?
The figures come from two separate surveys. The job creations/loss number is mostly derived from the “birth-death ratio” of business creations and those going under, which is subject to enormous and repeated revisions - while on the other hand, the Unemployment Rate is a real survey of about 60,000 households that are asked about their current employment situation, and therefore, is truly a much more reliable number. And even though traders know this, the market tends to respond to the headline number, which points more at a future trend than the Unemployment Rate, which paints a picture of the current situation. Since positive economic news typically is not a friend of Bonds and home loan rates, this report added to the worsening trend both have experienced recently.
And here’s another very interesting note, pertaining to the collection of the US Census numbers, which are vital for state and federal budgets and appropriations, amongst other things. The Census occurs every decade, and as we approach 2010, the government has already begun the temporary hiring of approximately 1.2 Million people. These individuals will be put to work for just a few months, but will count as new jobs created.therefore potentially making the numbers appear a bit better over the short term.
In other news, Personal Spending declined slightly in May, while Personal Income came in better than expectations, thanks in part to the economic stimulus package. Overall, indications are that the economy may be strengthening, but this process will likely be marked by continued market volatility. And this volatility we have seen in the financial markets is partly why the Treasury Department announced that they are scaling back their upcoming auctions, as the massive supply has started to weigh heavily on the Bond market and the US Dollar.
All the twists and turns we are seeing make it more important than ever to follow the advice of a knowledgeable mortgage professional who stays tuned in, and can offer good advice as to smart moves to take right now. Let me know if you or someone you know has any questions about your personal situation.
WANT TO PREVENT LOSING YOUR MIND FROM “SCHEDULE-OVERWHELM” THIS SUMMER? CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR A GREAT TOOL THAT CAN HELP YOU KEEP TRACK OF EVERYTHING YOU HAVE PLANNED…AND BEST YET, IT’S FREE.
Forecast for the Week
In terms of economic reports, Thursday will be the big day this coming week. We’ll learn more about the health of the retail sector via the Retail Sales Report for May. April’s Retail Sales Report was worse than expected and marked the eighth decline in the past ten months for Retail Sales. While May’s Report isn’t expected to show the consumer out spending wildly, it would be a positive sign to see a turnaround instead of a continued slide lower. Also on Thursday will be the next Initial Jobless Claims Report. Particularly given the high Unemployment Rate in last week’s Jobs Report, it will be important to see if this number shows any improvement.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds have traded lower recently, causing home loan rates to move higher. The reasons are many, but certainly due in part to all the extra Bond supply in the market. The Treasury has to have some way to pay for all the massive government stimulus plans, so Treasury auctions have been increasing dramatically - but the added supply is driving prices lower, with home loan rates moving higher. I will be watching closely to see if this trend continues.
Chart: Fannie Mae 4.5% Mortgage Bond (Friday Jun 05, 2009)
The Mortgage Market View…
MANAGING YOUR SUMMER SCHEDULE JUST GOT EASIERSummer schedules always seem to be hectic. Between sporting events, graduation parties, weddings, family vacations and more, it can be hard to keep track of everything your family and friends will be doing this summer.
That’s where a helpful little tool from Google? - called Google Calendar - can come in handy. As with most of Google’s applications, Google Calendar costs nothing and signing up is easy.
