The U.S. housing market recovery is underway. New home sales are at a multi-year high, housing starts are at pre-recession levels, and home builders plan for a strong 2013.
Since late-2011, falling mortgage rates have boosted buyer purchasing power. Now, today, in many U.S. markets, the number of active home buyers outnumbers the number of active home sellers. It’s among the reasons why home supplies remain scarce and why home prices are rising.
Roughly 20 percent of today’s home buyers purchase homes with cash. For everyone else, the ability to gain mortgage approval depends on income, assets, and, most importantly, credit scores. Your credit score is a predictor of your future payment performance and lenders pay close attention.
If you plan to buy a home in Boulder or anywhere else in the next 12 months, spend some time with this The Today Show interview. It’s five minutes of practical credit scoring advice, including separation of credit score myth from credit score fact.
Among the credit scoring tips shared :
- How to get your credit checked without harming your credit score
- The value of using automatic payments with credit cards
- How to use “old” credit cards to boost your credit score
You’ll also learn about utility companies and why you should never be late with payment.
As compared to August 2011, last month’s average, mortgage-financing home buyer’s FICO score improved 9 points to 750. The average “denied” mortgage applicant’s FICO score was 704. Clearly, standards are high. However, credit scoring is a system and, with time, you can improve your rating.
Watch the interview and find ways to make your credit score better. With better credit comes better mortgage rates.
Home values are rising in many U.S. markets. The S&P/Case-Shiller Index has home values up 1.2 percent as compared to last year, and the government’s Home Price Index shows an increase of 3.7 percent.
This has been partially evidenced by rising median home sales prices nationwide. Versus last year, the median sale price of a new construction home has climbed 17 percent, and the median sale price of an existing home sale is higher by 10 percent.
For home sellers, an improving market means the chance to net more proceeds from a home sale. Or does it?
In this 3-minute piece from NBC’s The Today Show, we hear about the home appraisal process and how it may be limiting the number of home sales nationwide, plus the prices at which homes are selling.
The interview includes several key insights into the home appraisal process :
- In a rising housing market, a home’s appraised home value may be lower than its “true” market value
- Short sales and foreclosures can make a negative impact on a home’s appraised value
- Consolidation in the appraisal industry has lowered product quality and may be harming valuations
One key take-away from the video is that home owners in Longmont should provide their home appraisers with as much relevant information as possible — especially information which may not be publicly-available. This includes records of recent “all-cash” sales of comparable homes which were never formally listed for sale.
One in three purchase agreements are canceled because of appraisal issues, according to the interview. Take steps to make sure yours is not among them.
The average family puts 10-15 percent of its monthly spending toward food, according to the Bureau of Labor Statistics and Department of Agriculture, with most of that food purchased at a supermarket.
The amount spent on food is less than the typical amount spent on housing each month but what makes food costs different from housing expenses is food costs are not “fixed”.
How much you spend on food each month is up to you and, using savvy shopping tactics plus coupons, you can lower your monthly food spend. Saving money on food leaves money for other purposes including savings, clothing and transportation.
In this 4-minute piece from NBC’s The Today Show, you’ll learn several easy-to-implement methods which can reduce your supermarket bills, as well a few “common sense” tactics you may have overlooked.
Among the topics covered in the video :
- The importance of shopping with a list, and of avoiding “the inner aisles”
- The value of generic brands, which are often near-copies of “brand name” products
- Why you should buy toiletries at a drugstore instead of at a supermarket
- Using “per unit” prices to compare different-sized packaging of the same product
- Buying fruit that’s in-season versus fruit that’s out-of-season
Another shared money-saving tip is to shop at grocery store without children. It can be fun for the family to shop together, as noted in the interview, but bringing children to the supermarket is a sure-fire way to raise your grocery bill.
Recent inflation data shows that the typical cost of food is rising in Longmont and nationwide. With these tips, perhaps you can lower your bill.
Should you lease a new car, or should you buy one? Like most financial questions, the answer depends on your situation. For some people, leasing a car presents distinct economic advantages. For others, buying a car is the way to go.
There’s plenty of online material to help you choose your optimal path, but this 3-minute piece from NBC’s The Today Show serves as an excellent summary. In it, you’ll learn about the basics of leasing a car, and for whom leasing can be a great fit. You’ll also hear reasons to avoid a lease completely.
The NBC interview makes all of the following points :
- Leasing allows you to drive a car that may be “too expensive” to purchase
- Leasing puts you in a new car, with the latest safety features and gadgets, every few years
- Buying a car means that you have no mileage limits, and can sell at any time
For many people, it concludes, buying a car is preferable to leasing one, with a notable exception being those people who can claim their car or truck as a tax deduction. Be sure to check with your tax advisor if you plan to take that route.
However, for another group — homeowners and active home buyers — leasing a car can invite mortgage approval trouble. This is because a car lease payment is assumed by a mortgage underwriter to be a perpetual debt; one that never reduces or gets extinguished. When a lease is complete, it must be replaced with a new lease, and so on.
Therefore, no matter how many payments remain in a lease, mortgage applicants must use the full car lease payment for purposes of a mortgage approval.
By contrast, for people whom are owners of their automobiles, car payments must only be added to debt ratios if more than 10 car payments remain until the car’s loan is paid-in-full. For homeowners and buyers in Boulder , this can improve debt-to-income ratios and support a higher purchase price on a home.
There is no firm rule for whether it better to lease a car or to own one. The arguments for both sides are compelling and reasonable. Start with the video, then do your own research.
Within Boulder homes, the kitchen is often the most “used” room in the house. It’s a meeting place for meals, for conversation, and for family. Unfortunately, that makes it a meeting place for bacteria, as well.
Along with bathrooms, kitchens are the most bacteria-heavy rooms in a home. Kitchens require a good, daily cleaning. This 4-minute interview on NBC’s The Today Show shows you how to do it.
Using ordinary household cleansers and some elbow grease, you’ll learn :
- Why sponges should be out of your kitchen and why loofahs should be in
- How to catch and trap fruit flies that spread germs and disease
- How to clean and disinfect porous cutting boards
You’ll also get tips on removing stubborn stains from the bottom side of a frying pan.
The video is loaded with good advice and is worth a watch if only to learn a single sanitizing tip.
For example, did you know that you shouldn’t soak wooden bowls or boards in water because the water causes the wood to separate, leaving it “open” to kitchen-borne bacteria? Or that, because of new soap-types, today’s dishwashers should be regularly disinfected?
Keep your kitchen free from bacteria is a constant battle but, using the tips from the video above, you’ll give yourself a fighting chance.
Insurance is protection against unexpected expenses and insurance policies are available for nearly any scenario you can envision — even your own ransom. But just because an insurance policy is available, that doesn’t mean you should buy it.
Some insurance policies give you good bang for the buck. Others are plain wasteful.
In this 3-minute segment from NBC’s The Today Show, you’ll hear of several common insurance policies and their relative merits to people of Colorado who purchase them.
For example, Americans will spend an estimated $450 million on pet insurance this year. Because of the policies’ restrictions and deductibles, though, it’s an insurance policy that rarely pays off. This is one reason why financial experts often recommend that you pass on purchasing pet insurance.
Within the segment, other reviewed insurance policies include :
- Mobile phone insurance
- Flight and travel insurance
- Extended warranties for electronics
- Umbrella policies
- Renters insurance
There’s also discussion about home warranties, and why you should avoid policies that last longer than one year.
Insurance should be an important part of your overall financial plan. However, the key is to have the proper policies in place, with an appropriate amount of coverage. Review your policies annually and keep your coverage current.
The typical U.S. taxpayer will receive roughly $3,000 in federal income tax refunds this year — an average of $250 per month. So, what would you do with an extra $250 monthly? This segment from NBC’s The Today Show offers some advice.
Whether you’ve already filed your annual taxes for 2011, filed an extension, or will squeak by on the deadline, you could probably be doing more with your taxes. The above video shares some tips. It’s four minutes of solid insight on tax refunds, tax withholdings, and reducing your household’s overall “bad debt”. There’s something for everyone.
Among the points covered in the tax refund piece :
- Consider changing your personal payroll exemptions so your 2012 refund is $0
- Remember that refunds are not “free money” — it’s your money. Spend wisely.
- Use your tax refund to fund retirement accounts
Advice is also shared about how to use your tax refund to fund a reserve account, or emergency fund. As a homeowner or home buyer in Boulder , applying tax refunds to a savings accounts in this manner can go a long way. When you’re a homeowner, maintenance costs can be sudden and unexpected. A furnace can explode, for example; or, a roof could spring a leak. Having money set aside for crisis is essential.
Having a savings account will also improve your household’s long-term financial stability.
As a reminder, in most years, federal income tax is due April 15. However, with Tax Day falling on a Sunday and with the federal government closed for a holiday the following Monday, U.S. taxpayers in Colorado and nationwide get a reprieve until Tuesday, April 17, 2012.
According to Freddie Mac’s weekly mortgage rate survey, for 13 straight weeks, the average 30-year fixed rate mortgage has held below 4.000% for mortgage applicants willing to pay up to 0.8 discount points plus a full set of closing costs.
These are the lowest mortgage rates in history and now — with a bevy of loan programs for the nation’s 11 million “underwater homeowners” including HARP, the FHA Streamline Refinance, and the VA IRRRL — millions of U.S. homeowners can exploit the current mortgage rate environment.
In this 4-minute clip from NBC’s The Today Show, you’ll learn about today’s mortgage market and your refinancing opportunities in Colorado.
The video begins by telling us that 14 million credit-worthy Americans have yet to refinance their respective mortgages, and are leaving an average of $471 in “wasted savings” on the table each month which adds up to more than $5,600 annually.
That’s a big number.
Some of the video’s other key points include :
- Refinancing is “worth the hassle” when mortgage rates are as low as they are today
- The best rates are reserved for homeowners with the highest credit scores
- Comparison shop — your current mortgage lender may not offer you the best rates
Furthermore, the video reveals the characteristics of the homeowner type most likely to benefit from a refinance. These traits include having with 20% equity in the home; have plans to live in the home for at least the next 36 months; carrying a current mortgage rate of 5 percent or higher.
It should also be added that, with a zero-closing-cost or low-closing-cost mortgage, even a small reduction in your mortgage rate can make a refinance worthwhile.
Mortgage rates are low but can’t stay low forever. If you haven’t participated in the Refi Boom, talk with a loan officer and review your mortgage options. You may be able to save hundreds of dollars per month with just modest closing costs.
Credit scores play a huge role in today’s mortgage market — larger than at any time in recent history. Blame it on the high default rates of the last half-decade. Lenders are reserving their lowest rates for the customers most likely to make on-time repayments.
Mortgage rates are at an all-time low in Colorado. However, the low rates you see advertised on TV and online are only available to the home buyers and would-be refinancers whose credit scores are pristine. Having a high credit score is often the difference between getting “the best rates” from your lender, and getting something worse.
The first part of improving your credit score is understanding how it works. In this 5-minute piece from NBC’s The Today Show, you’ll learn the basics :
- Why you shouldn’t close a credit card after you pay off a large debt
- What is the maximize balance to leave on your credit cards, relative to your credit limit
- What types of credit checks harm your credit scores, and which ones don’t
You’ll also learn how to shop for a mortgage with multiple lenders without having your credit score “dinged”, as well as several proven methods to raise your credit score quickly.
In the end, good credit scores are the result of paying bills on time and staying with your means. Those with the best scores, get the best rates.
Will your home gain value over the next 12 months? Nobody can know for sure, of course, but should recent housing trends continue, there’s concrete cause for optimism.
The housing economy has suffered since 2007, knocking home values down nearly 20% nationwide. And while some areas have fared better as compared to others but, in general, home values are down.
Mortgage rates are down, too, and that’s good news for buyers in Broomfield. The combination of low rates and low prices has led home affordability to an all-time high. As you’ll hear in this 4-minute interview with NBC’s The Today Show, carrying a mortgage costs 25% less per month as compared to just 3 years ago.
Some other notes from the interview include :
- There are more buyers out looking for homes today, which leads to more sales
- The housing market is expected to get gradually better, month-by-month, in 2012
- Foreclosures will continue to be a big part of the housing market
With housing supplies shrinking, buyers throughout Colorado may find their best “deals” today — before the Spring Buying Season begins in February.
However, we can’t forget that housing markets are local — not national. Each town and neighborhood has its own market drivers and prices where you live may have already started to climb.
For accurate, up-to-date data on the housing market, talk with a local real estate agent.