Wednesday, April 30, 2014

Fed continues tapering bond purchases; market reacts positively

The Dow Jones industrial average closed at an all-time high Wednesday.

Once again, the Fed announced today what most expected: They will stay the course by shaving off another $10 billion a month in bonds and treasuries purchases, down to $45 billion in total each month. Fed officials have indicated they will continue doing so until something drastic occurs.

The move comes after reports of an overall weak first economic quarter, but in spite of it all, the Dow closed at an all-time high on Wednesday afternoon. Perhaps investors viewed the Fed's decision to continue reducing stimulus efforts as a positive forecast for further market recovery.

Fed officials also reaffirmed their desire to keep interest rates low for the foreseeable future. At the current rate of tapering, however, the bonds and treasuries purchases will be no more by September...unless something happens to stall the slowdown. When the stimulus is over, it's anyone's guess what will happen.

As it stands, mortgage interest rates remain quite low while home values are comparatively high. Due to this combination of factors, many homeowners could obtain a lower mortgage interest rate with a higher loan-to-value ratio. This means a lower monthly payment while continuing to build home equity. If this sounds beneficial to you, feel free to call one our Vertex loan officers to see what you can do at 877-939-0339.

Friday, April 25, 2014

Have housing prices hit a ceiling?

Maybe, except for Denver

Graphic courtesy of

Since home values nationwide took a nosedive about six or seven years ago, housing prices have really made a comeback. So much so, in fact, they've exceeded peak levels from heady pre-recession days in many places.

Take Denver, for example: The metro area's average home value hit $245,200 last month, an all-time high. Despite steadily increasing asking prices and modest interest rate hikes, however, demand seems to be through the roof. According to a local realtor interviewed by the Denver Post (see link above), residential properties in the area average about 25 days on the market before being sold, a far cry below national averages of 102 days, often with multiple offers above asking price.

As is typically the case, Denver's swelling home values match the area's soaring rent prices, which makes investing equity in a home all the more attractive. Buyers can still take advantage of considerably low interest rates below 5 percent and government programs to get their foot in the door, both figuratively and literally. That is, as long as they aren't outbid by someone with a higher percentage down upfront.

In other regions across the U.S., prospective buyers aren't biting at rising home prices, suggesting a weakening housing market - see graphic above. There was much speculation that perhaps just a harsh winter was stalling the market, but even after temperatures warmed, it appears buyers may be getting priced out of home values they can't afford.

Does all this mean that home values may finally start dropping? Only time will tell. If you live in a red-hot market like Denver, though, don't expect the meter to fall too much.

To check out where home prices in Denver metro are hottest or coldest, visit Trulia's "Heat Map" here:

Thursday, April 17, 2014

Boost your home's value & reap the benefits


Spring into action on your improvement projects

Warm weather has finally returned, encouraging the notion we should be outdoors making the most of spring. Time to fire up the grill, sit on the patio and enjoy longer nights before sunset. You can finally dust off your bike or other favorite summer hobby and get moving again.

It's also a great time to knock off that home project you've been thinking about all winter. Besides enhancing your living space and potentially increasing efficiency, you can also raise your home's value, in turn putting more cash back in your pocket. By boosting value, you can obtain a lower interest rate and get better pricing through a refinance, also lowering monthly payments. And obviously, you could eventually sell the house for a higher price.

There are probably thousands of things you could do to make a positive change, ranging from mixing up your furniture "feng shui" to knocking down walls and adding windows. It is definitely worth thinking about making a change if it can help you save in the long run.

The TV show and magazine "This Old House" offers its top 10 list of home improvements, starting with creating more space. Adding more natural light is almost always a surefire way to make your home more attractive to the next buyer as well.

The DIY Network has its own list of home project ideas, focusing a little more on energy efficiency. These are triple-win projects: Not only can a new air-conditioning unit, furnace, windows or plumbing add to your home's value, you can also save on your utilities bills (and reduce your carbon footprint!).

If you don't have a lot of extra cash to invest in a big project, focus on these cheap, easy ways to get more bang for your buck. You might be surprised how much something as easy as matching appliance panels could make your kitchen appear more updated and pulled together.

Once you've tackled your home to-do list, you can kick back and return to enjoying all of the finer pleasures warmer weather brings. Isn't that what spring and summertime is all about?

Friday, April 11, 2014

Got 20% down? If not, you can still buy

When buying a new house, the rule of thumb historically has been put down 20 percent upfront, then borrow and pay off the rest on a set timetable. Borrowing 80 percent or less of a home's value is the magic number most lenders use to determine your ability to borrow free of extra costs. If you cannot put down the full 20 percent, however, there are other alternatives at your disposal...for a premium, of course.

The Federal Housing Association offers the opportunity for borrowers to purchase new homes with as little as 3.5 percent of the total purchase price paid upfront. The "catch" is that an extra mortgage insurance premium is paid each month in addition to your base mortgage payment. Besides the FHA program, if you prefer to go another route with less than 20 percent down, you can obtain private mortgage insurance to make up the difference.

Sometimes utilizing mortgage insurance is the only tool available to qualify for a loan, depending on your circumstances. Want to learn more? Visit the FHA's website to get more information here.

On the other hand, if you qualified for your last mortgage through an FHA program or using private mortgage insurance and you have since paid off more than 20 percent of the home's value, congratulations! You can refinance to get rid of that extra insurance premium and only focus on paying the principal and interest on the mortgage itself.

Whether you are interested in purchasing a new home with less than 20 percent equity or you are ready to get rid of the PMI on your current mortgage, a Vertex loan officer would be more than happy to walk you through the different options available. Feel free to visit our website for more info on the process or call our office toll-free at 877-939-0339 to see what makes the most sense for you.

Friday, April 4, 2014

The ever shifting U.S. job market

Job growth continues with almost 200,000 added

Graphic courtesy of ADP National Employment Report

The March jobs report released today could be described in a variety of ways, depending on your perspective: steady, promising, solid, flat, or lackluster. An estimated 192,000 jobs were added to the economy and unemployment remained even at about 6.7 percent. This comes in close to the roughly 200,000 jobs expected to be added but shy of some predictions for a big spring bounce back after a harsh winter.

If you look at the numbers more closely, however, job growth is barely keeping up with population growth, so are there really more job opportunities? This CNN breakdown takes a closer look at where new jobs are coming from and how it compares to years past. According to this data, a large portion of the net job growth stems from fewer company layoffs than in the past five years rather than outright new job creation.

In light of the newest jobs data, Fed chief Janet Yellen maintains that growth in permanent, full-time jobs and wages both need to be much healthier before Fed policies will be drastically altered. She has stated that interest rates will remain low for quite some time until more evidence of economic recovery is more "solidly" documented.