Northeastern PA Mortgage Blog by John Topa

How Spiking Oil Prices Have Mortgage Rates In Tow

2008-05-23T14:40:56Z

High oil prices are derailing the mortgage market this week, taking an almost-vertical path higher.

Since mid-February, prices are up by 50 percent.

Rising oil prices can be a threat the U.S. economy because with every extra dollar that Americans pay to energy companies, there is less money available for every other company that makes up our national economy.

Strangely, it comes at a time when the "other" companies need it the most -- their costs of operating are rising, too.

So, businesses are faced with a tough choice and both option prove poor for mortgage rates.

Keep prices level and suffer smaller margins (and profits)
Pass higher costs onto consumers in the form of higher prices

If profits suffer, job cuts and a weak corporate spending can undermine an economic recovery. If higher costs are passed on, it leads to inflation and that devalues the U.S. dollar and mortgage bonds.

This is why mortgage rates have spiked along with oil prices this week. And, when oil prices level off a bit, we can expect that mortgage rates will, too.

Crude oil is up 1.8 percent this morning.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

We Konw that Prime Rate will Likely Rise Before It Falls

2008-05-22T12:28:07Z

Three weeks after adjourning, Federal Reserve officials release detailed minutes of their most recent meeting.

The April 30, 2008 minutes were released Wednesday and it affirmed traders' beliefs that the Federal Reserve will not be in a hurry to lower the Fed Funds Rate again.

This is bad news for two groups of people whose borrowing costs are tied to Prime Rate, the interest rate that is 3 percentage points higher than the Fed Funds Rate:

Homeowners with home equity lines of credit
Americans with credit card debt

Because Prime Rate moves in lock-step with the Fed Funds Rate, it, too, has fallen by 3.25 percent since September and now rests at 5.000 percent.

With the release of the April FOMC Minutes, though, it appears that Prime Rate is more likely to increase than to decrease moving forward.

If your home equity line of credit offers a "convert-to-fixed-rate" option, now may be a good time to consider switching over. Be sure to talk with your loan officer first, though -- he/she may have alternate options for you.

(Image courtesy: The Wall Street Journal Online)

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Simple Real Estate Definitions: Loan To Value

2008-05-22T12:26:07Z

Loan-to-value is a math formula that represents the relationship between how much a home is "worth" and how much money is borrowed against it.

Loan-to-value is often abbreviated as "LTV" and is one of the many factors that lenders consider when underwriting a mortgage application.

The math formula is straightforward:

In the LTV equation, Loan Size is the amount of money borrowed from the bank and Home Value is the lower of the home's purchase price or appraised value.

Home loans with low loan-to-value ratios are usually less risky for banks. This is one reason why mortgage rates tend to be more favorable for home buyers and homeowners when their respective LTVs are low.

Typically, a "low" LTV loan is one in which the loan-to-value is 80 percent or less. In some instances, however, 70 percent is considered "low". The cut-off point depends on the mortgage lender and the mortgage product.

On a home purchase, the one way to lower LTV is to make a larger downpayment, thereby reducing the LTV equation's numerator. Buying a home for below-market value would not reduce LTV, for example, because the purchase price would be used as the equation's denominator.

On a home loan refinance, the denominator is always the home's appraised value.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Shopping for the best rate? Make sure you get up to the minute pricing.

2008-05-20T08:54:59Z

Yesterday, several mortgage lenders issued three separate "rate sheets" in response to the changing mortgage market.

It was the fourth time in the last 6 trading days that mortgage lenders issued multiple rate sheets in a day, and continued the trend that started in mid-January.

The yo-yo nature of mortgage rates underscores the importance of making mortgage rate comparisons within a limited time frame.

Multiple quotes should be gathered with an hour of each other and, even then, it's prudent to ask your lender: "Has there been a mortgage rate reprice in the last hour?"

The current market volatility is in contrast to the "normal" environment of one-rate-sheet-per-day to which mortgage rate shoppers have been accustomed. But with the changing economy, we all have to adapt.

Mortgage rate quotes from this morning won't necessarily be valid this afternoon so if you're in the market for a home loan, be sure to do your shopping in a limited timeframe and don't forget to ask about the reprice.

Looking Ahead 5/19/08

2008-05-20T08:52:43Z

Optimism ruled the markets last week -- optimism about employment, optimism about housing, and optimism about inflation.

Mortgage rates edged lower overall.

Despite the positive sentiment from Wall Street, consumer confidence in the economy reached a 28-year low.

This is a normal divergence because investors live in the "future" of markets while Americans live in the "right now" of life where food prices are high, gas prices are still rising, and job prospects are somewhat weak.

Consumer confidence surveys have to be taken at face value, though. Yes, Americans are nervous about the economy and their household budgets, but that rarely deters them from spending.

In April, for example, Retail Sales (excluded autos) were up 0.5 percent -- more than double analyst expectations. And this was before economic stimulus checks showed up in tax-filers' mailboxes.

Perhaps this is one more reason why markets were so pleased last week.

This week, there isn't much economic information to sway markets. On Tuesday, we'll see the Producer Price Index which is like a Cost of Living for Business measurement and on Friday we'll see the Existing Home Sales report.

Strength in either will be good for economy and should benefit both stocks and bonds, and should lower mortgage rates. Weakness will have the opposite impact.

Smart Money Magazine Says Renters Have Lame Excuses

2008-05-20T08:51:38Z

It's not often that a mainstream media publication taunts renters into buying homes, but that's exactly what Smart Money does in its latest issue.

The Smart Money Web site "lead-in" reads 5 (Lame) Excuses for Not Buying a Home. That's a forceful title!

It's unfortunate that renters could feel antagonized by the author's tone because the article raises very good counter-points to the more popular reasons why renters avoid homeownership.

Owning a home is a serious responsibility and does require commitment. However, a renter should not feel bullied or hurried into buying because for as much as personal economics are at play, personal emotions are at play, too. Both deserve respect.

So, renters: Put your blinders on and give the Smart Money article a read. There's good advice in there once you get past the author's bias.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Recession Report

2008-05-20T08:46:18Z

Retail Sales measures total receipts at stores that sell tangible "things" and -- aside from weak demand for automobiles and automobile parts -- Retail Sales displayed surprising strength in April.

So much strength, in fact, that many experts are changing their predictions about the U.S. economy's fate.

Several months ago, most pundits declared that a economic recession was all but inevitable. Today, a growing number are changing their views.

Not only are stock and credit markets improving, but data such as April's Retail Sales figures suggest that their fears were overblown.

The takeaway from a story like this is that "experts" do a much better job of interpreting the past than predicting the future. A person can make an educated guess, but it's impossible to know what the future holds for the economy, or for housing, or for mortgage rates.

Even when the outcome is "inevitable".

market review

2008-05-20T08:44:06Z

With little economic news to influence trading and despite a late-Friday afternoon spike, mortgage rates edged lower last week.

Two weeks ago, when it lowered the Fed Funds Rate by a quarter-percent, the Federal Reserve noted two things:

The economy was stabilizing
High energy costs threatened inflation

In the days that followed, though, the U.S. dollar strengthened and crude oil prices fell.

This positive reinforcement of the Fed's outlook spurred the stock market at the expense of the bond market.

Mortgage rates rose during that period.

But, starting last Monday, the dollar started to soften and oil touched another all-time high. At $126 per barrel, crude oil is now close to double its May 12, 2007 price of $69.

High oil prices are inflationary and speak directly to the Federal Reserve's concerns: Too much inflation can derail a fragile, recovering economy.

The stock market gave up its prior gains last week and that is why we saw mortgage rates improve -- it was the unwinding of the economic optimism.

This week, optimism (or pessimism) about the economy will be swayed by a number of factors including Tuesday's Retail Sales report and Friday's Consumer Sentiment survey.

The most important data point to watch, though, will be Wednesday's Consumer Price Index report. We know we should watch it Ben Bernanke told us to watch it. Keeping inflation in check, remember, is one of the Fed's major focal points for the economy.

In addition, this week will feature 14 public speaking appearances by Federal Reserve members. Expect each speaker to speak plainly about the economy, its future and the Fed's current rate-cutting cycle.

When Fed speakers stump, markets listen closely so expect mortgage rates to be jumpy all week long.

(Image courtesy: The New

Northeast PA Values Are RISING, Remember Real Estate Is LOCAL

2008-05-08T08:51:33Z

When real estate news is reported on television or in the papers, it's usually told as a national story. Unfortunately, stories like these aren't helpful for everyday Americans because real estate is not a national market.

Real estate is local.

The graph above was used by Fed Chairman Ben Bernanke in a speech to Columbia Business School earlier this week. Using data from conforming mortgage fundings, it shows the change in home prices from year-to-year on a county level.

Any county not in red increased in value.

In other words, contrary to what reporters tell us, real estate is retaining its value just fine nationwide. Aside from a few counties and states, most areas appreciated.

Graphics like this put important real estate issues in perspective. Home values may falling precipitously in some areas, but those neighborhoods represent just a fraction of the country overall.

In most regions, home values are up.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

You Are Not Immune, No Matter What Your Credit Score Is

2008-05-08T08:49:38Z

Four times annually, the Federal Reserve surveys 84 different banks about general banking conditions.

One of the survey questions asks about current mortgage lending standards and whether they are loosening or tightening.

The chart at right is from the April 2008 survey and it illustrates what we already know: It's getting tougher and tougher to get approved for a home loan.

Some of the areas in which mortgage guidelines are tightening are well-known:

More thorough income documentation
Higher credit score requirements
More "money in the bank" post-closing

Some areas are less well-known:

More scrutiny of prior delinquencies
Strict review of appraised values

Overall, getting a mortgage approval from a bank is more difficult than in months past and the tightening trend is expected to continue throughout the rest of the credit cycle.

No "class" of buyers is immune, either -- not even the "prime" ones.

Home prices may fall going forward but stricter mortgage guidelines means that fewer home buyers will be able to take advantage. If you're unsure about your credit profile, check with your loan officer to see how additional restrictions could impact your ability to purchase (and finance!) a home.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Why Free Credit Reports Are Worth What They Cost

2008-05-08T08:47:56Z

The ubiquity of "free" credit reporting services like FreeCreditReport.com, TrueCredit.com, and AnnualCreditReport.com have helped breed a new generation of credit-aware Americans.

Because credit ratings have more importance to everyday life than in years past, this is a welcome development. For example:

Lenders use credit ratings to determine borrowing rates
Insurers use credit ratings to determine premiums
Employers use credit ratings to make hiring decision

Unfortunately for Americans, though, not all credit reports are created equal. And when it comes to actually applying for credit in the form of a new credit card or mortgage, the free reports are worth precisely what they cost.

This is one reason why home buyers should have their credit reviewed by a mortgage lender as soon as possible in the home buying process -- the free reports offered by the major credit bureaus may be misleading and incomplete.

Free credit reports are useful for identifying identity theft and reviewing active accounts but do very little to help a potential creditor gauge your creditworthiness.

As the chart shows us, each industry's creditors has a way they like to do business and that way is the "standard" way.

(Image courtesy: The Wall Street Journal)

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Market Report 5/08

2008-05-08T08:46:34Z

Mortgage rates ended higher last week on stronger-than-expected jobs data, strong consumer spending, and an appetite for riskier investments.

But, investors were most excited about the Federal Reserve's hint that its rate-cutting cycle may be over.

The week was quiet until Wednesday when the Federal Reserve voted to lower the Fed Funds Rate by a quarter-percent.

The rate cut wasn't the big news, however.

Market players were most interested in Fed's press release in which it confirmed that the economy is struggling, but improving. The remarks were both soothing and a strong contrast to the Alarmist Analysts -- the ones that make for better television than analysis sometimes.

The Fed's statement also forced investors to rethink their economic outlook for the short- and long-term and when investors change their outlook, markets can be volatile.

One of the more important shifts in thinking now is the attitude towards the U.S. Dollar. An improving economy tends to be good for the dollar and that can help lead to lower mortgage rates.

The dollar's gains last week, incidentally, helped lower gas prices nationwide for the first time in almost 3 weeks. In the 18 days leading up to Friday, gas prices had made 18 consecutive record-highs.

This week, with very little new data and with few companies reporting earnings, expect market momentum to determine in which direction mortgage rates will go.

Because momentum can change quickly, be prepared to lock your mortgage rate if you see one that fits your budget -- it may not last long.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Why Mortgage Rates Aren't Falling Even Though The Economy Is Shedding Jobs

2008-05-08T08:43:33Z

According to the Bureau of Labor Statistics, the U.S. economy shed 20,000 jobs in April 2008. The labor force now counts at 146 million people as employed.

Normally, a loss of jobs would foretell economic weakness and would be a good thing for mortgage rate shoppers. Today, though, traders had been expecting a larger loss of 70,000 jobs.

In other words, today's jobs report looks surprisingly strong.

The stock market is now rallying on optimism that "the worst is over" for the U.S. economy and evidence supporting the Federal Reserve's remarks that its rate cuts were starting to take hold.

The stock market's gains are the bond market's losses.

Mortgage rates are up today because the cash that is fueling the stock market is coming from the sale of all types of bonds -- including mortgage bonds.

This is unwelcome news for people doing mortgage comparisons today, or buying a home this weekend.

In general, interest rates on adjustable-rate mortgages are increasing more than on fixed-rate mortgages.

(Image courtesy: Wall Street Journal Online)

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

The Fed's "Non" Impact On Mortgage Rates

2008-04-30T08:28:17Z

The Federal Open Market Committee adjourns from its two-day meeting at 2:15 P.M. ET today.

Markets expect the Fed to lower the Fed Funds Rate by 0.250 percent in its press release but it's not what the Fed does that matters to economy right now.

It's what the Fed says.

If the Fed states that future rate cuts are needed to stabilize the economy, mortgage rates should rise because rate cuts tend to create inflation. Inflation is the enemy of mortgage rates.

By contrast, if the Fed states that it will "pause" before making additional rate cuts (or hikes), mortgage rates should fall.

We'll dissect the message in full late this afternoon but the most important message to remember is this:

The Federal Reserve does not directly control mortgage rates.

The Fed only controls the Fed Funds Rate, the interest rate on a very specific type of loan made from one bank to another. The Fed Funds Rate, however, is directly related to a consumer-focused interest rate called Prime Rate.

Prime Rate is the basis of interest rates on credit cards and home equity lines of credit.

If the Federal Open Market Committee votes to lower the Fed Funds Rate by a quarter-percent, it means that the interest rate on Americans' collective credit card and home equity line debt will fall by a quarter-percent, too.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

80/20 Rule Apllies To Mortgage Foreclosures

2008-04-29T14:28:25Z

RealtyTrac released Q1 2008 foreclosure statistics and the data follows an interesting statistical phenomenon most commonly known as the "80/20 Rule".

The 80/20 Rule states that 80 percent of the effects come from 20 percent of the causes.

In this case, 80 percent of bank repossessions in the first three months of 2008 came from 20 percent of the states in the union.

Accounting for 156,463 repossessed homes nationwide:

California (40,023 homes)
Texas (14,935 homes)
Michigan (12,016 homes)
Ohio (10,299 homes)
Florida (10,185 homes)
Georgia (8,265 homes)
Arizona (7,956 homes)
Colorado (7,022 homes)
Tennessee (4,533 homes)
Indiana (4,446 homes)
Illinois (4,216 homes)

Overall, 0.55 percent of homes were repossessed by banks in the first quarter.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

New Home Sales: How Newspaper Headlines Mislead You

2008-04-25T14:10:54Z

Newspaper headlines rarely tell the full story and today's papers provide a terrific example.

From the Baltimore Sun (and others):

New-home sales lowest since 1991
8.5% March decline exceeds forecasts; prices also tumble

As always, there's more to the story than the headline.

The Census Bureau reported a 8.5 percent decline in New Home Sales last month, but in the "fine print" of the report, the Census Bureau cites a margin of error of 16.1 percent.

By including a margin of error, the Census Bureau is acknowledging that the "headline number" is not precise and that the actual change in New Home Sales data lies somewhere between the values -24.6% and +7.6%.

Notice that the range of possible reading includes positive numbers.

This means that New Home Sales could have just as easily shown growth in March -- if only the Census Bureau had interviewed a different set of home builders.

The Census Bureau acknowledges this possibility, adding that it "does not have sufficient statistical evidence to conclude that the actual change is different from zero." The data, therefore, is worthless.

The housing market may be strong or the housing market may be weak. Most likely, it is both of these things. It all depends on your street in your neighborhood because all of real estate is local.

Either way, look deeper than the headlines. They're a good source of information, but the real analysis requires a deeper look.

Source
New Residential Sales In March 2008
Census.gov
April 24, 2008
http://www.census.gov/const/newressales.pdf

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

How To Determine When Your Tax Rebate Check Arrives

2008-04-24T09:21:52Z

More than 130 million Americans will receive tax rebates this year as part of Congress' $168 billion economic stimulus package.

Payments begin in about two weeks and range from $600 for individuals to $1,200 for couples, plus an additional $300 per child.

Not everyone is eligible for a full rebate, however.

For single filers earning more than $75,000 and joint filers earning more than $150,000, the tax rebate is reduced by $50 for each $1,000 of income beyond the limits.

An individual with no children, therefore, will not receive a tax rebate if income exceeds $87,000 annually. The IRS provides a tax rebate calculator that can help make sense of the math.

For tax filers using direct deposit, the rebates will be paid based on the last two digits of the social security number:

SSN ending in 00-20 will arrive May 2
SSN ending in 21-75 will arrive May 9
SSN ending in 76-99 will arrive May 16

For tax filers using paper checks instead of direct deposit, payouts begin a little bit later on May 16 and extend through mid-July. The IRS makes the exact dates known on its Web site.

For late income tax filers, the IRS send rebate checks about two weeks after the returns are processed, but not before the regularly scheduled date.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

It Doesn't Matter That The Median Home Sale Price Rose In March 2008

2008-04-23T09:05:39Z

The National Association of REALTORS released its Existing Home Sales report for March 2008. An "existing home" is one that is not considered new construction.

A sub-headline in the report showed that the median sales price of all homes sold in March increased by 2.5 percent to $200,700.

But don't assume that the housing market is improving because of a statistic like that because in the field of Statistics, median is just the "middle" in a group of numbers.

With respect to the Existing Home Sales, the median sales price is the price point at which half of all homes sold went for more, and half went for less.

If more homes sell in high-priced San Jose, CA than in low-priced Youngstown, OH, for example, the median will be skewed to the high-side. The reverse is true, too.

Median sales price make for good headlines, but it does nothing to talk about the local market and that's where real estate is bought and sold.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Co Signing for a Mortgage, The Possible Implications

2008-04-22T13:13:18Z

As mortgage lenders limit how much money they will lend and to whom, co-signing home loans is growing in popularity.

"Co-signing" a home loan is when a third-party -- usually a parent or relative -- promises to make repayments to the bank in the event that the borrower falls behind on his obligations.

Money experts usually advise against co-signing notes because of the long-term financial risks, but people still do it for a number of reasons including "wanting to help".

If you're thinking about co-signing a home loan for a friend or loved one, it's important to consider the implications of sharing credit with another person.

The four questions below may help you with your decision:

Why can't the borrower get approved on his own? It is because of poor credit ratings? Lack of income? History of foreclosure?
If the borrower stops paying the mortgage, can you afford to make the full payment due each month?
If the borrowers defaults on the mortgage and doesn't notify you, how will a foreclosure on your credit rating impact your family finances?
When the co-signed loan appears on your credit, will the debt load prevent you from getting approved for your own loans in the future?

Not only can a co-signed home loan create serious financial burdens, but it's a long-term commitment, too.

Once the note is co-signed, the only way to separate the signers is terminate the note entirely. The two ways to accomplish that are to remortgage the home out of the co-signer's name, or to sell the home and retire the debt.

Co-signing on a mortgage is not "bad" but bad things can happen should the primary signer face personal and/or financial difficulties. Before agreeing to share credit, consider the implications should something go wrong.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Market review 4/21/08

2008-04-21T10:17:50Z

The S&P 500 added 4.3 percent last week -- more than during all of 2007 -- in what was a good week for the economy and a bad week for mortgage rate shoppers.

After Friday's close, mortgage rates were higher by as much as 0.375% versus the Friday prior. This reversed a trend of falling rates for Americans.

In recent weeks, mortgage rates had been falling as investors fled risky stocks and parked their money in the bond markets.

A trading pattern such as this one is sometimes called "Flight to Quality" and it creates a high demand for all types of bonds. When bond demand is high, bond prices increase and that drives bonds' relative rates of return down.

Over this past week, however, the Flight to Quality unwound.

Investors saw opportunities for stock market gains and funded stock purchases by selling bonds that they had amassed over the weeks prior. This created an imbalance of bond supply versus bond demand and that caused bond prices to fall.

Naturally, the corresponding rates of return on the bonds rose.

And so, because mortgage rates are really just "rates of return" on mortgage-backed bonds, we can understand why mortgage rates suffered last week as the stock markets were gaining.

It wasn't anything fundamentally bad in the bond market as much as it was the attraction of stock market gains.

This week, there won't be much economic data to cross the wires but 160 companies in the S&P 500 will report their earnings. This could have a broad impact on mortgage rates, similar to last week.

If corporate earnings are stronger-than-expected, expect mortgage rates to continue higher as additional monies flow into stocks at the expense of bond markets.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Simple Real Estate Definitions: Average Days On Market

2008-04-18T10:10:33Z

In the world of real estate, Days On Market is the number of days between when a home lists for sale and when it goes under contract.

It is often abbreviated as DOM.

Average Days on Market is a similar statistic but instead of applying to one home in particular, it applies to all homes in a given neighborhood, ZIP code, or city.

Average DOM is calculated by adding the number of days for which every listed home in an area was available for sale, and then dividing that number by the total number of listings.

In a buyer's market, Average Days On Market is often elevated. This is because homes don't sell as fast as during a seller's market when the Average DOM can be quite low.

For buyers and sellers of real estate, Average Days On Market can be a strong indicator of home prices. When Average DOM falls, home prices tend to increase.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Credit Scoring Tips For A Better Mortgage Rate

2008-04-17T10:16:48Z

Credit scoring is becoming more important to mortgage pricing so now would be a terrific time to brush up on your credit education.

If you understand how the system works, after all, you can make it work to your advantage. One terrific place to start your research is at myFICO.com.

Published by credit scoring powerhouse Equifax, myFICO.com give you information right from the source. There are tens of pages of tips and tricks from which everybody can learn.

Here are some basic pointers to get you started:

Use It Or Lose It: If you don't use credit, the credit agencies can't assign you a credit score. Spend $10 monthly on your credit cards and then pay it in full to "get on the grid" and get yourself a score.
30 Is The Magic Number: Holding your credit card balances below 30 percent of their respective limits shows an ability to manage credit responsibly. Before consolidating multiple credit cards onto one credit line, consider that card's credit limit. Overload it and the consolidation could hurt your credit score.
The Trend Is Your Friend: A track record of paying accounts on-time means that you're likely to continue paying on-time. Credit bureaus like on-time payments. If you've been late, catch up immediately. At 35 percent, this is the largest component of your credit score.
History Is The Best Teacher: Don't close unused credit cards. Having a credit "history" accounts for 10 percent of your score.

There are more helpful hints available at the Web site so with additional credit score adjustments to mortgage rates expected later this year, the best way to protect yourself is to be proactive.

Identify potential issues in your credit profile and work to improve them.

Credit scoring is not always intuitive so if you're not getting the personal information you need from general Web sites, ask your loan officer for an in-depth analysis. The mortgage rate you save may be your own.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

If History Is An Indictor, Gas Prices Will Rise Another 10%

2008-04-17T10:15:28Z

Average gas prices reached an all-time U.S. high Tuesday, touching $3.40 per gallon. San Francisco and Tulsa are the nation's bookends at $3.94 per gallon and $3.11 per gallon, respectively.

But before you wonder if relief is coming to your family budget, remember that "rising gas prices" is a conversation we have every April.

Using data from gasbuddy.com and looking back to 2004, we can see that gas prices tend to rise during the Spring season.

If the pattern holds, we'll should see another 10 percent increase at the pump before gas prices settle back down over the summer and fall months.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Mortgage Lenders Get "Once Bitten, Twice Shy" And Impose New Restrictions

2008-04-11T13:07:59Z

Getting approved for a conforming home loan is now tougher than before.

Again.

As home loan defaults mount, government-sponsored financier Fannie Mae has imposed new guidelines on what it will lend and to whom, highlighting the need for a strong credit profile and a downpayment.

In other words, Fannie Mae is outright declining mortgage applicants whose credit is weak and whose payment history shows signs of trouble. But, it's not just the "fringe" borrowers that are finding it harder to get a mortgage.

Buyers with strong credit profiles are being hit by new changes, too.

One such change says that owners of second homes must now have a 10 percent equity position in their homes; 15 percent if the property is in a "declining market".

This is up from 5 and 10 percent, respectively, and represents a growing trend to make homeowners have a "stake" in their own homes. Downpayment requirements are higher for all mortgage products, in general.

Fannie Mae's changes are the third set of restrictions imposed since December 2007 and more tightening is expected over the next few months. That makes now a compelling time to buy a home -- borrowing money will be more restrictive (and more costly) later.

If you are actively shopping for homes and have not been pre-qualified in the last few weeks, reach out to your loan officer and get checked against the latest set of mortgage guidelines.

It's better to know today than after you make an offer.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com

Are You Financially Smarter Than a 12th Grader

2008-04-11T13:06:16Z

Every two years, the Jump$tart Coalition issues a "personal finance" exam to high school seniors.

The test highlights the importance of personal financial literacy among America's youth and comes at an especially important juncture.

Many experts -- including Fed Chairman Ben Bernanke -- believe that basic financial knowledge is essential for (and lacking in) teenagers. Jump$tart's exam did little to disprove this.

This year, 12th graders answered 48.3% correct on average and posted the lowest scores since Jump$tart first issued the test in 1996.

A sample question from the 31-question test:

Which of the following types of investment would best protect the purchasing power of a family's savings in the event of a sudden increase in inflation?
A twenty-five year corporate bond
A house financed with a fixed-rate mortgage
A 10-year bond issued by a corporation
A certificate of deposit at a bank

Find out the answer to the sample questions and 30 other questions by taking the complete Jump$tart Personal Financial Literacy test for yourself online.

The average adult scores 68%.

John Topa, First Sunrise Mortgage, Northeast PA Mortgage Advisor. www.FirstSunriseMortgage.com