Buying A House When Inventory Is Tight

And Other Mortgage News

This week, we’ll start with five home renovations with the best return on your investment. Then we’ll list four questions that a lender may ask you that may seem incredibly personal. And finally, we’ll wrap up with how to buy a home when the inventory is tight.

Home Renovations with Best ROI

A recent study byRemodeling magazine and the National Association of Realtors found that not all renovations are created equal when it comes to resele value.

Spring is the favorite time to start a home improvement project, so if you’re starting to plan, here’s some projects to consider:

1. Putting in a steel front door
2. Installing fiber-cement siding
3. Adding a wooden deck
4. Garage-door replacement
5. Minor kitchen remodel

You can download the study here.

And don’t forget to read our other blog post on remodeling.

Surprising Questions from Your Lender

Don’t be surprised if you get asked these questions:

1. Are you party to a lawsuit?
2. Are you married, single, or separated?
3. What is your ethnicity and race?
4. How many years have you been in your profession?

Seems a bit odd, doesn’t it?  But there are some really good reasons why they ask.

So, working back upwards. They want to see that you’ve been in your profession for a few years to show stability. Even if you haven’t been able to find a job in it due to the economy, you will appear more credit worthy than someone who zips around from career to career.

Number three seems a little backwards, but government agencies want to ensure that you’re not discriminated against for ethnicity and race. So that’s why they ask.

Number two is essential in states which have community property laws. If you’re only separated, you could still be held liable for your spouse’s debts, thus making it difficult to pay your mortgage if you’re having to pay their credit card debts.

And the number one question was on the list for similar reasons: if you are held liable, it could impact the amount of money you have available to pay back a mortgage.

Buying a House When Inventory is Tight

Existing home sales in April were at the highest pace since the homebuyer tax credits caused the market to spike in November 2009. In fact, there probably would have been even more home sales due to the low interest rate if there wasn’t such a lack of inventory.

Zillow is reporting that inventory is down 14% compared to last year. However, they maintain that this inventory will be easing over the next few months.

Of course it depends upon where you live, and where you want to buy.

Yahoo Finance recommends:

• If you are eager to buy and have found a home you really want, you make your offer as strong as possible. Your real estate agent should have some solid suggestions since they will know the area, and how much homes are selling for.
• If you have time to shop around, you can be a bit more aggressive with a lower offer.
• Another way to set yourself apart from other buyers’ is to increase the amount of earnest money you put up with your offer.  The money goes toward your down payment if your offer is accepted, and is returned to you if the seller declines your offer. You lose the money if you back out of the offer, so only do this on a home you really want.
• Consider the type of mortgage you will use. A conventional mortgage may be more attractive to the seller. The requirements for the condition of the property are often stricter for FHA. loans, so some sellers may be wary of being asked to make repairs before the sale can proceed.
• Limiting the number of contingencies in your offer regardless of whether they are related to financing, inspections or other conditions,will strengthen your offer.

Do yourself a favor and get pre-approved with a reputable loan officer. That way, you’ll know exactly how much you can afford when you place your offers, and you will be a stronger candidate since you already have financing.

Planning Your Vacation

Colleges are starting to release their students. Other schools are winding down. If you have kids, you know that their minds are on how many more days until they’re free. Free from having to sit for six hours. Free from homework. Free from tests.

As adults, we keep that mentality as well and wish for retirement when we’ll be free from three hour long meetings, paperwork, and difficult coworkers. It’s important that we carve out some time for a vacation during the summer to recharge and get back in touch with that feeling of being free.

When you get back, you’ll have a fresh outlook on how to tackle things that may have been bothering you for months. And you will keep burnout at bay.

Last Minute Vacations

Many travel sites offer deeply discounted rates when you buy at the last minute to get completely booked. There are two ways you could go about planning a last minute vacation. The first is to decide on your destination, and then research the best way to get there. The second is to search for the least expensive options, and then figure out if that’s where you want to go.

Also, places that are usually packed in winter have package deals to get people to stay in the summer. So if you like hiking, look into a ski resort to see if they’re open.

Lifehacker offered these recommendations for checking flights:

There are many ways to get a cheap flight. We love Hipmunk, and now Google Flights, for finding great deals. Invisible Hand is also a great way to get alerts when there’s a cheaper flight you might be missing.

But these tools can only take you so far. The best thing you can do is do your own research and weigh your options. When searching for flights, always use a date range search rather than specifics whenever possible. Airlines like Virgin America make this easy as they show you a range by default. Often times you’ll cheaper flights in the evening on weekdays, or simply bylooking for airfare on a Tuesday afternoon.

The key is just to remain as flexible as possible. If you can’t be too flexible with your dates, be flexible with your location.

You can also use travel sites. If you do, be sure you get a confirmation number within 24 hours. If not, follow up promptly. You don’t want to get to your destination and then find out it never went through.

1. SmarterTravel
2. Expedia
3. Travelocity

Inexpensive Vacations

Sometimes, a major expense is boarding your pets. An inexpensive alternative is finding a local teen or tween who loves animals and would be happy to stop by two to three times a day to feed your pets, walk them if needed, and change the water. You can also ask them to water your garden, bring in the mail and newspapers, and keep the house looking like it’s occupied.

Another alternative is taking off only on the weekends rather than for a whole week or two at a time. It’s time to go see all of the cool touristy attractions within a day’s drive of you that you’ve always promised yourself you’d see but never have taken the time.

Step one is choose your experience. If you want to try zip-lining, or finding a wood roller-coaster, or perhaps find an aquarium with a special exhibit, use your favorite search engine. From there, you can move on to step two which is decide on a location.

Also, look into combining activities. For example, you could look into taking the train into Old Sacramento and visiting the train museum. To take it further, you could choose to go during Labor Day weekend when the town is transformed into the Old West.

To minimize the cost of hotels, rent a motorhome. The great thing about recreational vehicles is the built in kitchen, so you can save on the cost of food as well. If you have small children, an RV is fantastic for allowing them to sit in the back and look out the window, or watching movies on the television. It’s easier for them to stretch their legs rather then feeling stuck in a car. And there’s a built in bathroom, but keep a close eye if the RV is bouncing around, or ask the driver to pull over for a few minutes. The largest expense after the cost of the rental will be gasoline.

Staycations

The key to a staycation is to ensure that no one knows you’re home so you can truly relax. So number one, turn off your phones. Don’t make yourself available.

Set up an autoresponder for your emails that you’re on vacation and that you’ll read your emails when you get back. Unsubscribe from mailing lists, or be put on web only.

Do some things you never do. If you don’t have a housecleaner, hire one to do a big cleaning. If you don’t want to do laundry, bring it to a service. Go try that restaurant that you’ve been reading about. Or have dinner delivered each night.

Spend time outside. Run around barefoot. Make a big pitcher of juice with a lot of ice, and curl up and plan on reading those five books you bought three years ago.

If you have a neighbor with kids about the same age, swap babysitting for a day so you can go out and spend the day with your spouse, or just stay home and relax without having to take care of anyone.

Have a movie marathon. Want to watch the entire Star Wars saga? Or the whole Arrested Development DVD series before the new one starts?

Goof around with the kids. Have a sack race, or a water balloon fight. Then finish up with a barbecue where you toast marshmallows at the end.

The important thing is to find something that will be relaxing and fun for you that won’t increase your stress because you’re worried about the money, or the time.

Where would you go if you could go anywhere this summer?

Contemporary Architecture

Is there anything more confusing then wondering if something is modern or contemporary? Literally, contemporary means that which is being built right now. But the design esthetic is one looking forward and applying materials and designs in new and interesting ways.

Modern is a broader sense for homes that embraced the new industrial age with an minimal ornamentation, included structures of steel or concrete and large expanses of glass, and opted for open floor plans. We saw a version of this with the Eichler homes. Often, “modern” will get renamed to be “postmodern” or “neo-Classical,” etc.

Contemporary will often build upon Modern. Often, modern architecture was whitewashed over stucco. Contemporary will use metal or wood planks to act as siding, or paint with greys or adobe.

The bottom line is that there is no easy answer.

From Wikipedia:

The concept of modernism is a central theme in these efforts. Gaining popularity after the Second World War, architectural modernism was adopted by many influential architects and architectural educators, and continues as a dominant architectural style for institutional and corporate buildings into the 21st century. Modernism eventually generated reactions, most notably Postmodernism which sought to preserve pre-modern elements, while Neomodernism emerged as a reaction to Postmodernism.

Notable architects important to the history and development of the modernist movement include Le Corbusier, Ludwig Mies van der Rohe, Walter Gropius, Frank Lloyd Wright, Louis Sullivan, Oscar Niemeyer and Alvar Aalto.

The good news is that most modern homes were built to last if they were built prior to the 1960s.

Zillow notes that the common design elements of a modern or contemporary home are:

Following World War II, America experienced a boom in growth and innovation. Rather than seeking to reinvent home styles of previous years, architects were building sleek homes and experimenting with new shapes and materials. The development of post-and-beam construction allowed for exterior walls of glass and open floor plans.

Although many homes combine a mixture of architecture styles, there are few defining features of a true mid-century modern or contemporary home:

• low, over-sized flat roofs
• open-beamed ceilings
• open floor plans
• extensive, large windows and/or exterior glass walls
• simple, clean lines

We may see a resurgence of these modern design elements thanks to the popularity of AMC’s show Mad Men.

Clare from Projectphile put together a blog making fun of how poorlymodern architecture would do in today’s safety conscious world. Hopefully it will bring back some memories of when you were a child.

What modern and contemporary design elements do you like?

This Week’s Market Commentary

This week brings us the release of three pieces of relevant economic news in addition to the minutes from the most recent FOMC meeting and a speaking engagement with Fed Chairman Bernanke and a congressional committee. Only one of the economic reports is considered to be highly important to the markets and mortgage rates, but the others do carry enough significance to influence mortgage rates if they show a wide variance from forecasts.

Monday and Tuesday have nothing of importance scheduled, so look for stock movement to heavily influence bond trading and mortgage rates. Stock gains will probably pressure bonds and cause mortgage rates to move higher. If the major stock indexes show losses during the first couple days, we may see bonds thrive and mortgage rates remain unchanged or move slightly lower.

The National Association of Realtors will give us their Existing Home Sales report at 10:00 AM ET Wednesday. This data tracks resales of existing homes in the U.S. during April, giving us a measurement of housing sector strength. This type of data is relevant because a weakening housing sector makes a broader economic recovery less likely. Current forecasts are calling for an increase in home sales between March and April. Ideally, the bond market would prefer to see a decline, indicating housing sector weakness. A large increase in sales could lead to bond weakness and a small increase in mortgage rates Wednesday morning since a strengthening housing sector raises optimism about broader economic growth.

Also late Wednesday morning will be testimony from Fed Chairman Bernanke to the Joint Economic Committee of Congress. He will be updating them on the status of the economy and the Fed’s outlook for future growth and monetary policy. This will be watched closely and is one of those speaking engagements that can cause considerable movement in the financial markets and mortgage rates.

Furthermore, the minutes of the last FOMC meeting will be released Wednesday afternoon. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy and economic growth. The goal is to form opinions about the Fed’s next move regarding interest rates and their current bond-buying program (QE3). Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading Wednesday.

April’s New Home Sales report is the sister report of the Existing Home Sales and will be released late Thursday morning. It gives us a similar measurement of housing sector strength and future mortgage credit demand, but tracks a much smaller portion of housing sales than Wednesday’s report does. Actually, it is the least important release of the week and probably will not have much of an impact on mortgage pricing unless it shows a sizable variance from forecasts. It is expected to show gains in sales from March’s level, meaning the new home portion of the housing sector also strengthened last month.

Friday has the week’s most important economic report with April’s Durable Goods Orders being posted. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. These are items made with an expected life span of three or more years. It is currently expected to show an increase in new orders of approximately 1.6%, indicating the manufacturing sector remained strengthened a little last month. That would be relatively bad news for the bond market and mortgage rates, but this data is known to be quite volatile. Therefore, a small variance from forecasts would likely have little impact on Friday’s mortgage rates.

Overall, I believe Wednesday will be the most important day for rates, although Friday should be active also as it will be shortened due to the early close ahead of the Memorial Day holiday and has the most important report of the week. Still, Wednesday’s economic data and Chairman Bernanke’s testimony in the morning and FOMC minutes in the afternoon means we could see a couple changes to mortgage rates that day. I suspect that Tuesday will be the calmest day of the week. There is nothing to be concerned with Monday, but strong selling in bonds late Friday means there is a fairly large increase in mortgage rates waiting if your lender did not make an upward revision during afternoon trading. I don’t think we will see as much movement in rates that we saw last week, however, it is still recommended to maintain contact with your mortgage professional if you have not locked an interest rate yet.

Simple Tips for Natural Flea Control

With the weather warming up, flea eggs are hatching. You may have thought you got them all, but a flea egg can live for years in your carpet waiting for the right moment to hatch. The little blood suckers can sense when a suitable warm blooded animal moves in.

Did you know that the flea responds to light and dark? So when a flea jumps on you, it’s because you walked past and changed the amount of light.  Fleas have been known to jump at shadows as well.

So why should you use natural products instead of the chemical solutions?Fleas are like cockroaches in that they adapt to their environment, and even can become immune to the chemicals.

Types of Fleas

Over 2,000 species of fleas have been described worldwide, including:

• Cat flea (Ctenocephalides felis)
• Dog flea (Ctenocephalides canis)
• Human flea (Pulex irritans)
• Northern rat flea (Nosopsyllus fasciatus)
• Oriental rat flea (Xenopsylla cheopis)

There are four stages to a flea’s life cycle: egg, larva, pupa, and imago (adult).

Natural Flea Control

The majority of fleas live in the environment rather than on your pet, so for every one flea you might find on your animal, there will be about 30 others around the house.

So natural flea control needs to have two prongs. The first is getting rid of fleas on your pets and the second is to get rid of fleas in your home.

For your pet, there are flea combs that can be used. The flea gets trapped in the comb tines and fur. You can then throw the whole shebang into the toilet and flush the problem away. You can create natural flea dips out of fresh rosemary or lavender. You can also put a cut lemon in boiling water, and then let it steep overnight. Then put this in a spray bottle and use it to regularly spritz your pet especially around the head and behind the ears being careful of the eyes.

You can also purchase natural treatments made from citrus or chrysanthemums that repel fleas.

Additional repellents are eucalyptus, cedar, clove and citronella. And keep your pet’s bedding laundered regularly.

To get rid of fleas in the home, sprinkle Borax, diatomaceous earth, or salt on all carpets and really rub it in.  Let it sit overnight and then vacuum it up. The boric acid dissolves the shells. Salt dehydrates the eggs and larvae. And the diatomaceous earth cuts the flea’s legs.

A word of note: Diatomaceous earth for pest control should not be confused with “Pool Grade” diatomaceous earth, which is treated with heat, causing the formerly amorphous silicon dioxide to assume crystalline form which is not effective for insect pest control.

Repeat this every three days for nine days (or longer) and you’ll get ahead of the flea life cycle. Some sources say you don’t need to let it sit longer than 20 minutes. You will need to test to see what works best for your infestation.

Secondly, you can set up a trap for the little pests with a bowl of warm, soapy water or beer. Then set a light up right above the light. When the home is dark, the fleas will be attracted to the light and drown in the water. You can also purchase electric flea traps so you don’t have to put out the bowl of water. It works in a similar fashion with a light and a trap to capture the pests.

Finally, you can change what your pet eats.

Brewer’s Yeast
Add a small Brewer’s yeast tablets to your dog’s food. Much like prescription meds (but much healthier), this is excreted through Fido’s skin making him less attractive to fleas. Check with your veterinarian for the proper dosages depending on weight.

Apple Cider Vinegar
A spoonful of this stuff added to your dog’s water makes their skin more acidic and not-at-all tasty to fleas. If apple cider vinegar is not your dog’s cup of tea, you can dilute it 50/50 with water, pour into a spray bottle and use as a repellent.

Some report that raw garlic is also useful for dogs but should never be given to cats.

Finally, look into nematodes for outdoor control.  Nematodes are tiny worms that feed on flea larvae.

There are some that will say that natural methods aren’t used because they’re not as effective as chemicals. The natural methods do need to be used consistently and persistently. Unlike chemicals, you will need to use the methods more than once.

Have you started to have problems with fleas yet this year?

Mortgage Mistakes to Avoid and Other News

We’ll do our quick roundup of mortgage news first and then get to the four biggest mistakes to make with your mortgage.

Four Reasons to Refinance Before Summer

Yahoo Homes gives us this list:

1. Your home value is likely to decrease during the summer.
2. The government may stop influencing mortgage rates and backing programs.
3. You could be affected by new escrow account rules.
4. Lowering your interest rate by less than 1% can have big long term impact.

U.S. Homebuilder Confidence on Rise

The National Association of Home Builders/Wells Fargo builder sentiment index released Wednesday rose to 44 in May from 41 in April. The increase for May was the first month-to-month gain since December. Concerns over rising costs for land, building materials and labor have been holding the confidence levels down.

So more people are wanting new homes. Materials are becoming more available. There’s still some issues with smaller builders having difficulties getting loans, but large builders are finding it easier. The biggest issue is still finding qualified labor in areas that are building up primarily in Arizona, California, Texas, Colorado and Florida.

Late Payments On Decline

So, we have more homes being built, more homeowners, more refinancing, and fewer late payments. The percentage of mortgage holders at least two months behind on their payments fell by 21% in the first quarter of this year compared to last year stated credit reporting agency TransUnion earlier this month.

California had a statewide rate of 4.2%. Florida still has the highest mortgage delinquency rate in the nation for the first quarter at 11%, but that’s down nearly 21% from the same period last year, the firm noted.

Four Mortgage Mistakes to Avoid At All Costs

You may be seeing specials like 1.99% mortgage rates and want to rush to refinance. But take a deep breath first and read these four mistakes to avoid.

1. Paying Your Mortgage Before Paying Off Higher-Interest Debt. Credit card debt and auto loans are not tax deductible like student loans and home mortgages. Also, their interest rates are usually higher overall. So pay off the higher interest debt first, and then focus on the rest. You’ll save yourself a lot of money in the long run.
2. Getting a Loan for “Free”. Often you’re trading no-cost loans for a higher interest rate. While that may be best for you right now, research all of the effects so you can make a smart choice.
3. Getting a 15-Year Mortgage, But Having No Financial Security. Can you really afford the payments? If you have some concerns, look into the 30 year and pay extra.
4. Not Thoroughly Researching Lenders. Some questions you may want to ask your loan officer include whether or not your interest rate will be fixed or variable, and if the lender offers an introductory rate, when it will expire, and what the new rate will be. A professional loan officer will want to help educate you on the rates and fees.

If you’re thinking about refinancing, make an appointment with a professional loan officer to discuss your financial situation. They study the rates and fees as well as news that impact rates. And a professional loan officer will be happy to help you find options for your mortgage.

Electronics for Realtors

There are so many wonderful tools out there now to help Realtors do their job faster and easier. We’ve done some research and rounded up some of the best technology and tips to help you grow your business in this modern world.

Photos

The Eye-Fi card goes into your camera and can immediately upload the images. So, if you have smart phone or a tablet with internet connection, the Eye-Fi can use that directly from the camera and upload images to your smartphone or tablet. Then you can review the images and choose which to upload to your website.

Calendars

Google calendar is a great way of combining all of your calendars into one easily accessible calendar from home, work, or on the go with your smartphone. You can also have your email accessed through Google Mail, and then directly add dates to the calendar.

Portable Office

Monster recommended the following list for a portable office:

• Individual tablet PCs for displaying and retrieving documents and other computing tasks. “The client’s signature directly on the screen is as good as a signature on paper,” says Turner.
• A portable printer.
• Treo 650 smartphones that display listings and photos.
• Internet-based fax numbers.
• Proprietary real estate software.

All smartphones can easily display listings and photos, so find one that works with the rest of your office and life.

Websites

Many Realtors now set up websites for the address of the property they’re listing. This is a great way of providing a unique experience for the home. You can add in numerous photographs and videos as you’re not limited to what sites like Zillow or MLS offer. You are also able to get a lot of attention when people see a house, see it’s for sale, and then see the domain. They can go home and look up the house right away and call you.

Lists

From Realtor.com, here’s a nice list of 10 great electronic gadgets that will make your life easier for that next big holiday or celebration.

From BusinessInsider, here’s their recommendation for the top 5 online to help Realtors grow their business.