Mortgage Hype.

I have been seeing all these ads from mortgage marketing bots, or mortgage company employees that just copy and paste; hysterical about the market sell off, (which has already started gaining again) going nuts about "falling rates". Here's what is really going to happen:

Regarding interest rates; they are like gas prices. Quick to go up, very slow to come down. I expect a less than a tenth of a percent dip in treasuries and that might translate into maybe a .125 dip, but it will recover quickly.

Today would be good to lock, but by next week it will be as if it never happened.

What goes up...

A quick word to preempt the people who will soon begin to scream about "the market".

The market is doing exactly what healthy markets should do: They go up... they are going to come down a little as people take profits. Then they go back up again.

The only time this didn't happen was when the government manipulated the natural state of things in the early 2000s and remember what happened then?

CNBC reprint: Home Prices at near highs. Here we go again?

Home prices surge to new high, up 6.2% in November

• The supply crisis in the housing market is not letting up, and neither are the home price gains.
• National home prices rose 6.2 percent annually on S&P CoreLogic Case-Shiller's most broad survey.
• Another S&P index of the nation's 20 largest housing markets showed a 6.4 percent gain, higher than analysts had expected.

Diana Olick | @DianaOlick

Published 5 Hours Ago Updated 17 Mins Ago CNBC.com

The supply crisis in the housing market is not letting up, and consequently neither are the gains in home values.

National home prices continued their run higher in November, rising 6.2 percent annually on S&P CoreLogic Case-Shiller's most broad survey, up from 6.1 percent in October. Another S&P index of the nation's 20 largest housing markets showed a 6.4 percent gain, higher than analysts had expected.

Prices nationally are now 6 percent higher than their 2006 peak, while those in the top 20 markets are still 1.1 percent lower.

"Home prices continue to rise three times faster than the rate of inflation," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.

Blitzer blames the continued lack of supply for the price gains, citing a very slow recovery in the home construction market. Home builders are ramping up production but are still not at even historically normal levels, never mind the huge pent-up demand in the market.

"Without more supply, home prices may continue to substantially outpace inflation," added Blitzer

Local metropolitan markets seeing the highest gains are those that were rising fastest before the financial crisis. San Diego, Los Angeles, and Las Vegas continue to see strong gains. Seattle and San Francisco are seeing the highest gains of all, due to strong employment and very tight supply in both those markets.

Home prices in November were still benefiting from very low mortgage interest rates, but that is no longer the case. Mortgage rates are up dramatically since the start of this year, making housing less affordable. That could put downward pressure on home prices during the spring market, especially compounded by new tax laws that limit the deductions for property taxes and mortgage interest.

Prices are unlikely to ease by much, however, given the still very short supply of homes for sale. The simple rules of low supply and high demand will serve as a strong contender against higher rates, as bidding wars will likely be less the exception and more the rule in the upcoming spring market.

The Final Walkthrough.

Completing Your Final Walk-Through

You put a lot of effort into finding the right house, and now that your closing is just days away, you're finally ready to start calling your new place home. Before this can happen, however, you should do a final walk-through of the property. 

What is a final walk-through? 
A final walk-through isn't a home inspection (that typically takes place in conjunction with your offer). It's not the time to request new repairs, either. Instead, this is an opportunity to make sure the condition of the home is as expected. Specifically, you'll want to confirm there haven't been any unexpected or unwanted changesmade to the property. 

What should you look for? 
Make sure there isn't any move-out damage and that all your requested repairs have been made. You'll also want to check that no extra furnishings have been left behind and that everything included in the home price -- items like appliances, light fixtures or window blinds -- are in place and in good condition. Use a checklist to guide you through this process.

When does it take place? 
The final walk-through can happen anywhere from a few days prior to your closing to just a few hours before.

Finally, be sure to bring a copy of your contract along for reference and consider asking your real estate agent or a home inspector to help you double-check everything and verify repairs. Remember, this is your last chance to give the property a good once-over before you legally claim it as your own.

Learning from Starbucks....

Sometimes we need to look for wisdom anywhere we find it. I was speaking to a Starbucks's corporate person recently and she shared with me their problem-solving matrix they call "LATTE". It stands for:

-Listen to the problem

-Acknowledge that it is valid

-Take Action (solve the problem)

-Thank the customer (client)

-Explain what happened so they understand

That was pretty good, I thought.

Warrantable vs. Unwarrantable Condos.

Are you contemplating buying a condominium in Florida?  The first thing you will need to determine is whether you are buying a “Warrantable” or “Non- Warrantable” Condo.

Conventional Mortgage Rules for Condos

The majority of home buyers use what's known as "conventional" mortgage financing. This means that their loan is backed by one of two government entities -- Fannie Mae or Freddie Mac -- and that the loan meets the two group's minimum standards.

With respect to condominiums, Fannie Mae and Freddie Mac use the term "warrantable" to describe condominium projects that meet their criteria. Condo projects and properties which don't meet Fannie Mae and Freddie Mac warrantability standards are known as “non-warrantable”. Non-warrantable condos can sometimes be more challenging to finance.

Typically, a condo is considered warrantable if:

• No single entity owns more than 10% of the units in a project, including the developer
• At least 51% of the units are owner-occupied
• Fewer than 15% of the units are in arrears with their association dues
• There is no litigation in which the homeowner’s association (HOA) is named
• Commercial space accounts are 25 percent or less of the total building square footage

Because of these rules, some of the common property types which fall into the non-warrantable category include condotels, time shares, fractional ownership properties, and other projects which require owners to join an organization, such as a golf club.

Mortgages for Non-Warrantable Condos

For buyers of non-warrantable condos, mortgage financing can be more of a challenge. There are fewer lenders available from which to get a loan. In general, a condo or co-op unit is considered non-warrantable if it shows any of the following characteristics:

• It's in a project which has yet to be completed
• It's in a project for which the developer has not turned over control of the HOA
• It's in a project which allows for short-term rentals
• It's in a project where one person owns more than 10% of all units
• It's in a project where the majority of units are "rentals"

In addition, a condo unit in a project involved in litigation of any kind will typically be given "non-warrantable" status. This is true regardless of whether the building is suing another party, or is the party being sued. Non-warrantable condo financing is unavailable via Fannie Mae and Freddie Mac.

A Seller's Perspective: Appraisals.

Home appraisals are a piece of the selling process where you may have to let go of the reins. Lenders often require the use of their own, FHA-approved home appraiser. That means you get zero say in who's determining the financial value of the home you've lived in, loved, and sunk your savings into.

Here are some things sellers can do—straight from the home appraisers' mouths—to navigate the process of home appraisals.

Keep in mind that home appraisers aren't magicians

The appraiser won't know what your home is worth the second he walks in the door because home appraisals aren't magic. A good understanding of the home appraisal process will go a long way toward comprehending how your home's value is determined.

First, a home appraiser will pull comparable listings (called “comps”) from the nearby area. These are homes similar in style, location, and footage sold within the past few years. Then, he or she will come by your house to determine its condition and quality, as well as any other factors that would affect the cost of the home, and use that information — along with the comps — to make an accurate assessment.

This usually takes at least a few days — and definitely more than a few hours.

Prep your space — and its occupants for the home appraisals

No, the home appraiser isn't coming by to judge the cleanliness of your homestead — but it's still good form to declutter, dust, and mop beforehand to show your home in its best light.

Home appraisals won't typically devalue your home because it's messy — but a neat, organized home might help you.

Also, make sure the occupants of your home are prepared for the appraiser's arrival, including teenagers who tend to stay holed up in their rooms.

Get your paperwork in order before home appraisals

Before any and all home appraisals, gather all the information you have about the house and send it over. Most appraisers will ask for this upfront, either directly or through the lender or broker.

Appraisers recommend having on hand a list of major improvements as well as detailed info about the age and condition of the roof, HVAC systems, and major appliances. For any DIY projects, make sure you have the original permits.

There's nothing worse than an appraiser pulling comps for a 1,200-square-foot 1920s Cape Cod–style house, only to realize on the day of appraisal that your master bedroom addition adds an additional 500 square feet.

So go the full-disclosure route.

"Hand it to them on a silver platter: Here's my neat, gorgeous house, shown in its best light and all the things that are awesome about it".

Don't put too much stock in home improvements

We're sure your brand-new kitchen is stunning — but don't be surprised if it doesn't proportionally raise your home's market value when it comes to the home appraisals.

Home appraisers stress moderation in assuming how much your shiny, brand-new kitchen will add directly to the worth of your house. If you spent $50,000, you're likely to see only a fraction of that returned in value. That goes double for a new pool, which does not bring as much value as people think.

Don't engage in listing ‘puffery’

Before listing, make sure you and your agent take a realistic look at what your home actually offers. Are you including the basement square footage in the total? Are you hoping no one will notice your roof isn't new? Preparing yourself ahead of time with a pragmatic estimate will ease the appraisal process.

And above all else, make sure not to fudge the numbers.

This is particularly rampant in areas where the assessor's information isn't accessible online. When you know potential buyers have to actually, gasp, go in person to look up the sketches, it might be a lot more tempting to pad some square footage here and there.

After all, who will notice?

Here's who: Your appraiser.

The New Tax Act: A Side-by-Side Comparison

I watched the Congressional debates, listened to the pundits of both sides, and did my own research .... despite the hysterics, hyperbole, and outright fear-mongering and lies from opponents to the plan, "The Tax Cuts and Jobs Act" will benefit the vast majority of families in the lower and middle classes.

Can a single opponent explain - without exploding into exaggerated, generic hyperbole: How nearly doubling the standard deductions is bad for families? Why doubling the child tax credit is awful? How lowering the tax bracket rates for EVERY single family earning less than $400,000 is disastrous? How increasing the medical expense deduction is hurtful to Americans? The list of benefits in this Act go on and on.

To compensate (some like to say "pay") for these substantial tax cuts, the government will either have to either increase overall taxable revenues, or simply make cuts to bloated, overgrown, out-dated government systems. And considering how out-of-control the government has become, cutting less than 8% of its current expenditures can't be that difficult.

How Mortgage Pricing Moves with Economic News:

How mortgage pricing moves with economic news

Here’s a quick lesson in finance. Mortgage bond prices move in the form of basis points, and 100 basis points equals 1%.

Certain economic factors change the direction of stocks and bonds, things like domestic and worldly happenings and more specific indicators such as the jobs report, retail sales data, consumer confidence, Federal Reserve meetings, and more.

On any given day the market is negative, unchanged, or improved in the form of basis points. If you have your eyes on a 4% mortgage rate with no points on a 30-year fixed after the lender takes into consideration all of the pricing adjustments, and you’re hoping for something better by floating your interest rate (that is, not locking in your rate), and the market worsens 25 basis points, your 4% rate would still be available, but it would come at a cost of 25 basis points of your loan amount. If you’re looking at a loan of $400,000, that’s $1,000 in the form of discount points based solely on market forces. Such a change would come as a closing item in the form of discount points.

If the market improves by 0.25% and you’re looking at that 4% interest rate, now the 25 basis points will be a credit toward fees.

The higher the rate you choose to pay, the lower the fee tied to that specific rate. Conversely, the lower the rate you select, called “no points,” where no lender credit is awarded, but there are also no points paid either, is a middle-of-the-road option many opt for.

Market timing is hindsight

There’s no such thing as a nonprofit mortgage lender. All mortgage companies—brokers, banks, credit unions, any financial entity that offers mortgage loans—have a profit motive.

Securing the lowest possible interest rate is impossible, because you’ll never be able to borrow money at the lender’s cost of funds, ever. Moreover, there is no way to time the market; all you and your lender can do is make an educated decision about the rate and the pricing tied to your mortgage transaction in lockstep with the market.

Generally, offers from mortgage companies tend to be priced in close proximity to one another on any given day, as lenders have to stay competitive to be profitable. You can expect differences of 0.125% to 0.25% in rate among loan providers. It is up to you, as an informed consumer, to choose the mortgage company you believe will give you a competitive rate and pricing for your specific scenario.

Four Rate Hikes Expected in 2018

Well, I have been screaming this the last 11 months at least...  and although many of our clients will read "rates rising" as a horrible calamity, it actually is a positive on the macro.  Yes, that loan will be slightly more expensive...  but you'll be making considerably more money and will likely have a tax cut into the bargin, so it works itself out. 

Goldman Sachs predicts the Federal Reserve will raise rates at least four times in 2018, spurred by a tight labor market and higher levels of inflation.

The economy will continue to improve, spurred forward by the reconstruction following recent hurricanes and proposed tax cuts, Goldman economists wrote, according to an article by Reuters.

From the article:

“The U.S. economy heads into 2018 with strong growth momentum and an unemployment rate already below levels that Fed officials view as sustainable,” Goldman’s economists wrote in note dated Friday.

Other experts agree next year will see four rate hikes. Capital Economics recently released its prediction, saying next year’s change in Fed Chair won’t matter, rates will still be raised four times.

However, this is still more than Wall Street has been expecting for next year, the Reuters article explained, saying Wall Street’s top banks predicted the Fed will raise rates just three times in 2018.

From the article:

The U.S. central bank has raised rates twice this year and currently forecasts another hike in its benchmark lending rate from its current target range of 1.00 percent to 1.25 percent by the end of 2017.

The Mortgage Bankers Association also predicted rates will continue rising, saying mortgage rates could pass 4% or even 5% over the next few years.

Goldman also increased its current gross domestic product forecast, saying GDP will grow to 2.5% next year, and reach 3.5% by the end of 2019. The unemployment rate is predicted to fall to 3.7% by the end of 2018.

Source: Reuters