Mortgage Information

If you're like most buyers, a home is the most expensive purchase you'll ever make, and you'll probably need some form of financing.

There are many lending institutions that offer a variety of mortgage products. Financing options and rates can vary widely, so it is important to do your research and shop around to ensure you get the mortgage that best meets your needs at the best price.

I would be happy to refer you to some very good mortgage contacts I have in the Livermore, Pleasanton, Dublin or San Ramon areas, or to help you in any other way I can to secure the best possible rate for your home purchase. 

  

The Mortgage Market View...

What's A Couple Extra Trillion?

These days, the government often tosses around "billions" and "trillions" as they talk about various programs. Here's a great way to visualize what these amounts actually mean.

Let's begin with what $1 million looks like. Believe it or not, this little pile is $1 million (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.

While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet.

And $1 BILLION. now we're really getting somewhere.

Next we'll look at ONE TRILLION dollars. This is that number we've been hearing about so much. What is a trillion dollars? Well, it's a million million. It's a thousand billion. It's a one followed by 12 zeros.

(And notice those pallets are double stacked.YOU are the little person in the red shirt standing at the lower left corner) So the next time you hear someone toss around the phrase "trillion dollars". that's what they're talking about.

 

The financial markets will be closed on Monday in observance of Presidents Day, and in terms of economic reports, there won't be much action until midweek. On Wednesday, we'll get a look at the health of the housing industry with reports on Housing Starts and Building Permits for January.

It will be interesting to watch the housing reports over the next several months, as many people are acting to take advantage of currently low home loan rates that may be on the rise soon, as well as the potential of a juicy tax credit. Remember - the Homebuyers Tax Credit is only available on homes purchased with a contract date before April 30th, and the transaction must settle by June 30th.

We'll also get an update on inflation this Thursday, as the Producer Price Index will be released. This index measures price changes for wholesalers, and prefaces the more important Consumer Price Index coming on Friday, which measures changes in the price paid by consumers for goods and services. These reports are both particularly important, as the Fed will be watching very carefully for any signs of inflation. If inflation begins to rise, the Fed will have no choice but to begin to hike rates to fight off the dangers that inflation could pose to our economy.

In addition to those reports, we'll get our weekly look at employment through the Initial Jobless Claims data. Last week's report showed some encouraging signs, but there is still a long way to go before we'll see stabilization in the Unemployment Rate and some meaningful job creation. At the moment, 6.3 Million people remain unemployed for over six months - an increase of 5 million since the start of the recession in December of 2007. To reach the White House's projection of a 6% unemployment rate by 2015, the US would need to create 225,000 jobs per month, every month, for the next five years. But that kind of long term job growth has never been seen before. The year 2006, was the only year in US history that had job gains average over 225,000. But that was for just a single year - doing it for five years may be too much of a stretch.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bond prices and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bond prices fell early last week due to weak results from the Treasury auctions, but were able to rally towards the end of the week. When Bond prices are moving higher, home loan rates are improving - so I'll be watching out to see if the current ground can be held. If you have any questions about how home loan rates move - and if an opportunity exists that would benefit you - please don't hesitate to call or email me.

 

Forecast for the Week

The financial markets will be closed on Monday in observance of Presidents Day, and in terms of economic reports, there won't be much action until midweek. On Wednesday, we'll get a look at the health of the housing industry with reports on Housing Starts and Building Permits for January.

It will be interesting to watch the housing reports over the next several months, as many people are acting to take advantage of currently low home loan rates that may be on the rise soon, as well as the potential of a juicy tax credit. Remember - the Homebuyers Tax Credit is only available on homes purchased with a contract date before April 30th, and the transaction must settle by June 30th.

We'll also get an update on inflation this Thursday, as the Producer Price Index will be released. This index measures price changes for wholesalers, and prefaces the more important Consumer Price Index coming on Friday, which measures changes in the price paid by consumers for goods and services. These reports are both particularly important, as the Fed will be watching very carefully for any signs of inflation. If inflation begins to rise, the Fed will have no choice but to begin to hike rates to fight off the dangers that inflation could pose to our economy.

In addition to those reports, we'll get our weekly look at employment through the Initial Jobless Claims data. Last week's report showed some encouraging signs, but there is still a long way to go before we'll see stabilization in the Unemployment Rate and some meaningful job creation. At the moment, 6.3 Million people remain unemployed for over six months - an increase of 5 million since the start of the recession in December of 2007. To reach the White House's projection of a 6% unemployment rate by 2015, the US would need to create 225,000 jobs per month, every month, for the next five years. But that kind of long term job growth has never been seen before. The year 2006, was the only year in US history that had job gains average over 225,000. But that was for just a single year - doing it for five years may be too much of a stretch.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bond prices and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bond prices fell early last week due to weak results from the Treasury auctions, but were able to rally towards the end of the week. When Bond prices are moving higher, home loan rates are improving - so I'll be watching out to see if the current ground can be held. If you have any questions about how home loan rates move - and if an opportunity exists that would benefit you - please don't hesitate to call or email me.

 

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Feb 12, 2010)

Japanese Candlestick Chart

Use the mortgage calculators below to assist you in making some decisions around financing your new home.

Mortgage Qualification Calculator

This calculator will help you determine how much money you qualify to borrow. The results are informal. You will be subject to a credit approval from your financial institution taking into consideration existing debt load, amount of down payment, income and other variables.