Shannon Odom's (smodom) Blog

Retail Sales Weak In December; Home Affordability Gets A Boost

Shannon Odom (Northeast Bank) — Fri, 14 Jan 2011 01:07:59 -0800

Consumers keep spending, the economy keeps growing. Mortgage rates are easing lower this morning on just-released, slightly worse-than-expected Retail Sales data from December 2010. Excluding motor vehicles and auto parts, December’s sales receipts were $1.5 billion higher from November. Analysts had expected a number north of $2 billion. Despite falling short of estimates, however, December’s reading is the highest in Retail Sales history, surpassing the previous record set in July 2008, set during the recession. In addition, December’s strong numbers helped 2010′s year-over-year numbers go positive for the first time in 3 years. Although the data is a mixed bag for Wall Street, home affordability in Bangor is improving today. The link between Retail Sales and home affordability may not be up-front obvious, but in a post-recession economy like ours, it’s often tight. Retail Sales is another name for “consumer spending” and consumer spending makes up more that 70% of the U.S. economy. As spending grows, the economy tends to, too. Investors recognize this and start chasing “risk”. It becomes a boost for the stock market, but those gains are made at the expense of “safe” asset classes which include mortgage-backed bonds. Mortgage-backed bonds are the basis for conforming and FHA mortgage rates so, as bond markets sell off, asset prices fall and rates move up. Thankfully, rate shoppers will avoid that scenario today — at least for today. December’s Retail Sales results are a factor in the bond market’s early-day improvement. Conforming and FHA mortgage rates across the state of Maine should be lower today. Despite the good news, if you’re shopping for a mortgage, consider locking your rate as soon as possible. Mortgage rates are coming off a 2-week rally and look poised to reverse appear — especially with a full docket of data due for next week. As mortgage rates rise, purchasing power falls. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Foreclosure Activity Falls For The Second Straight Month, Drops To 30-Month Low

Shannon Odom (Northeast Bank) — Thu, 13 Jan 2011 02:24:35 -0800

According to foreclosure-tracking firm RealtyTrac, the number of foreclosure filings nationwide dropped for the second straight month in December. After falling 21 percent in November, filings were down by an additional 2 percent in December. “Foreclosure filing” is a catch-all term, comprising default notices, scheduled auctions, and bank repossessions. Like most months, a small number of states dominated December’s national foreclosure figures. 6 states accounted for more than 50 percent of all bank repossessions. California : 17% of all repossessions Florida : 11% of all repossessions Arizona : 6% of all repossessions Michigan : 6% of all repossessions Texas : 6% of all repossessions Nevada : 4% of all repossessions December’s foreclosure filings fell to its lowest levels since June 2008, but we can’t read into the report too much just yet. Foreclosure volume continue to be dampened by lawsuits and moratoriums related to controversy surrounding the so-called robo-signers. Foreclosure activity may have lessened in December anyway, but we can’t know for certain. Distressed properties are in high demand among home buyers, accounting for one-third of all home sales; typically sold at a steep, 15 percent discount as compared to non-distressed properties. Buying foreclosures can be a terrific “deal”. That said, buying a foreclosed home is different from buying a non-foreclosed home. Specifically, because you’re buying from a bank and not a person, contracts may vary from what’s “customary” and negotiations may be drawn-out. It’s one reason why buyers in Houlton – first-timers and investors alike — should talk with a real estate agent before writing an offer for a foreclosed property. You can learn a lot from the internet, but when it comes time to actually purchase a home, you’ll want an experienced professional on your side. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Comparing Mortgage Rates For Adjustable- And Fixed-Rate Mortgages

Shannon Odom (Northeast Bank) — Wed, 12 Jan 2011 02:51:47 -0800

For some homeowners, electing to take an adjustable rate mortgage over a fixed rate one can be matter of budgeting. ARMs tend to carry lower mortgage rates and, therefore, lower monthly mortgage payment as compared to a comparable fixed rate loan. Relative to fixed rate mortgages, current ARM pricing is excellent. Freddie Mac’s weekly Primary Mortgage Market Survey puts the 5-year ARM mortgage rate lower than the 30-year fixed rate mortgage rate by 1.02 percent. On a $250,000 home loan, a 1.02 differential yields a payment savings of $149 per month. ARMs are not for everyone, of course. Over time their rates can change and that can frighten people. An ARM can finish its respective 30-year lifespan with a mortgage rate as much as 6 percentage points higher from where it started. Some homeowners won’t like this. Other homeowners, however, won’t mind it. For this group, the ARM can be a terrific fit. Especially with the huge, relative discount in today’s pricing. A few scenarios that should warrant consideration of a 5-year ARM include homeowners that are: Buying a new home with the intent to sell within 5 years Currently financed with a 30-year fixed mortgage with plans to sell within 5 years Interested in low payments; comfortable with longer-term rate and payment uncertainty In addition, homeowners with existing ARMs due for adjustment may want to refinance into a new ARM, if only to push the first adjustment date farther into the future. Before choosing to go with an ARM, speak with your loan officer about how adjustable rate mortgages work, and their near- and long-term risks. Payment savings may be tempting, but with an ARM, payments are permanent. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

How To Renegotiate Your Credit Card Interest Rates To Something Lower

Shannon Odom (Northeast Bank) — Tue, 11 Jan 2011 03:53:32 -0800

Credit card debt, left unchecked, can pile up quickly. Especially for debtors making minimum payments. According to the Federal Reserve, a credit card balance of $5,000 at 23.99 percent APR won’t pay off for 16,127 years. That’s one reason why it’s important to manage your credit card rates, and renegotiate them whenever possible. In this 4-minute piece from NBC’s The Today Show, you’ll learn the tested tactics that can cut a credit card rate, and get monthly payments to a more manageable range. And it’s do-it-yourself — no debt management firms required. Some of the tips in the video include: Compare your current rate to the rate offered to new customers. Ask the lender for “new customer rate” if it’s lower. If your credit score has improved since application, ask for an interest rate more reflective of your current credit score. Be nice to the customer service representative. Kindness helps. Managing debt is an important part of household budgeting so if you’re finding your credit card payments and/or rates too high for your liking, try following the instructions as described in the video. And, above all else, be persistent. The credit card companies won’t likely approve your first request. :::::::::::::: Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

What’s Ahead For Mortgage Rates This Week : January 10, 2011

Shannon Odom (Northeast Bank) — Mon, 10 Jan 2011 01:17:08 -0800

Mortgage markets gained last week as a combination of safe-haven buying and an improving economic outlook attracted new buyers. Demand for mortgage-backed bonds outweighed supply and conforming and FHA mortgage rates edged lower. Last week marked the second straight week that mortgage rates fell in and around Maine. Rates had risen over the previous 7 weeks. According to Freddie Mac’s weekly mortgage rate survey, the national average rate for a 30-year fixed rate mortgage is 4.77 percent with an accompanying 0.8 points required. This week, with no new data due for release, look for last week’s two biggest stories — jobs and debt — to carry forward. The first such story relates to jobs. Friday, the Bureau of Labor Statistics released its monthly Non-Farm Payrolls report. Consensus estimates were for 150,000 net new jobs created December, with “whisper numbers” pegging the number as high as 250,000. Mortgage rates increased on the chance that the rumors were right. It turned out, they were not. Accounting for revisions to past months’ data, December’s jobs data was in-line with expectations, resulting in a mortgage rate retreat that lasted all day Friday. That momentum should carry forward into the early part of this week. The second story is tied to safe-haven buying. The U.S. mortgage market benefited from growing concerns within the Eurozone that Portugal could default on its debt. The story emerged three weeks ago when Portugal’s debt was downgraded. It picked up steam last week after a weak debt offering. It’s a similar beginning to what transpired in Greece last spring. Mindful of their respective risk, worldwide investors chose to shift risk toward safer asset classes which includes, of couse, mortgage-backed bonds. This week, those risks will remain and the flight to quality assets should continue. Mortgage rates will benefit. Given the likelihood that mortgage rates will fall this week, it may be tempting to let your mortgage rate float. That strategy could prove foolish. Mortgage rates fell to historic lows in 2010 and sprung higher at the first possible opportunity. Rates remain at ultra-low levels and have lots of room to rise. This week, consider buying on the dip. It may be the last chance you get. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

December’s Job Report : Good For Home Affordability

Shannon Odom (Northeast Bank) — Fri, 07 Jan 2011 02:13:33 -0800

On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls report. More commonly called “the jobs report”, the government’s data include raw employment figures and the Unemployment Rate. The jobs report hit the wires at 8:30 AM ET today. It’s making big waves in the mortgage market and may help home affordability for buyers in Bangor this weekend, and would-be refinancers across Maine. For this month, and for the rest of 2011, employment data will figure big in mortgage markets. 7 million jobs were lost in 2008 and 2009. Fewer than one million jobs were recovered in 2010. For the economy to fully recover, analysts believe that jobs growth is paramount. Consider how job creation influences the economy: More jobs means more income and more spending More spending means more business growth More business growth means more job creation It’s a self-reinforcing cycle and, as business grows, the economy expands, pushing stock markets higher. This tends to lead mortgage rates higher, too, because bonds can lose their appeal when stock markets gain. According to the government, 103,000 jobs were created in December, and October’s and November’s figures were revised higher by a net 50,000 jobs for a total of 153,000 new jobs created. Economists expected a net gain of 135,000. The Unemployment rate fell to 9.4, its lowest level since mid-2009. Wall Street is voting with its dollars right now. Mortgage bonds are improving, pointing to slightly lower mortgage rates today. The December jobs report was “average”, and home affordability is improving. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Loan Costs Increasing April 1, 2011

Shannon Odom (Northeast Bank) — Thu, 06 Jan 2011 01:25:26 -0800

Starting April 1, 2011, loan-level pricing adjustments are increasing. Most conforming mortgage applicants will face higher loan costs. Loan-level pricing adjustments are mandatory closing costs. They’re assigned by Fannie Mae and Freddie Mac, and based on a loan’s specific risk to Wall Street investors. First constructed in April 2009, loan-level pricing adjustment are a means to help Fannie Mae and Freddie Mac compensate for “riskier loans” by bolstering their respective balance sheets. Since the initial roll-out, Fannie and Freddie have amended adjustments five times. The pending April adjustment will be the 6th revision in two years. No class of conforming borrower is exempt from LLPAs. Each loan delivered to Fannie Mae is subject to a quarter-percent “Adverse Market Delivery Charge”. That cost is often absorbed by the lender. The remaining adjustments are grouped by category: Credit Score : Lower FICO scores carry bigger adjustments Property Type : Multi-unit homes carry bigger adjustments Occupancy : Investment properties carry bigger adjustments Structure : Loans with subordinate financing may carry bigger adjustments Equity : Loans will less than 25% equity carry bigger adjustments LLPAs are cumulative. A borrower that triggers 4 different categories of risk must pay the costs associated with all four traits. Loan-level pricing adjustments can be expensive — as much as 3 percent of your loan size in dollar terms. As an applicant, you can opt to pay these costs as a one-time cash payment at closing, or you can to pay them over time in the form of a higher mortgage rate. The loan-level pricing adjustment schedule is public. You can research your personal scenario at the Fannie Mae website. However, you may find the charts confusing. Especially with respect to which route makes the most sense for you — paying the adjustments as cash, or paying them “in your mortgage rate”. Phone or email your loan officer for help. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

The Fed Minutes Keep Mortgage Rates On Hold (For Now)

Shannon Odom (Northeast Bank) — Wed, 05 Jan 2011 01:14:06 -0800

The Federal Reserve released its December 14 meeting minutes Tuesday afternoon. There wasn’t much there to disturb mortgage markets, thankfully. The “Fed Minutes” is an official recap of the most recent meeting of the Federal Open Market Committee. It’s published 8 times annually, 3 weeks after the FOMC adjourns. The Fed Minutes is similar to the meeting minutes released after a corporate conference or condo association gathering in that they provide additional details about the conversation and debate that occurred between meeting attendees. The Fed Minutes are a lengthy companion to the Federal Reserve’s brief, more well-known, post-meeting press release. But, whereas the press release is measured in paragraphs, the minutes are measured in pages. Here is some of what the Fed discussed last month: On inflation : Core inflation levels “trend lower”; disinflation risks are low. On housing : The market is still “quite depressed”; demand is “very weak”. On stimulus : The Fed will stick to its $600 billion support plan In response, conforming mortgage rates in Maine are unchanged today. The no-change in rates is welcome news for this month’s home buyers and other people wanting to get a jump on the “Spring Buying Season”. Mortgage rates have been trending higher since November, erasing 7 months of gains in 7 weeks, and rapidly approaching the psychologically-important 5 percent figure. Currently, Freddie Mac reports the average 30-year fixed mortgage rate as 4.86%. As compared to November, mortgage rates are higher. As compared to history, however, mortgage rates remain low. If you are still floating a rate, or have otherwise not locked, your opportunity may be ending. Once the economy moves to higher gear, mortgage rates will be among the first of the casualties. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Pending Home Sales Rises To 6-Month High

Shannon Odom (Northeast Bank) — Tue, 04 Jan 2011 08:45:18 -0800

The housing market continues to expand, and surprise. According to the National Association of REALTORS®, November’s Pending Home Sales Index gained 3 percent from October. A “pending home sale” is a home under contract but not yet closed. The index is now at its highest point since April 2010′s federal tax credit contract expiration deadline. If the tax credit really did “borrow” sales from the summer months, as has been theorized, housing has rebuilt its foundation. We know this because, of all the housing data available to Belfast homeowners and home buyers, the Pending Home Sales Index stands apart as a forward-looking report — its designed purpose as described in its methodology. Because 80% of all homes under contract close within 60 days, and a statistically significant share of the rest close within months 3 and 4, the Pending Home Sales Index is an excellent predictor of future Existing Home Sales data. This is in contrast to the New Home Sales data and Case-Shiller Index, as examples, which both describe the real estate market as it existed two months in the past. The Pending Home Sales Index reports on housing as it exists right now. We should expect January’s Existing Home Sales report, therefore, to show marked strength, consistent with a housing market recovery. The downside of the Pending Home Sales Index is that it’s a national report and real estate is not sold nationally — it’s sold locally. To get a feel for your home market and how it’s faring, talk to a licensed real estate agent with access to local home sale data. If pending sales data is available, so much the better. Forward-looking figures can be more helpful than data that’s already old. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Housing And Mortgage Predictions For 2011

Shannon Odom (Northeast Bank) — Wed, 29 Dec 2010 05:01:10 -0800

With 2010 coming to a close, the “experts” are out in full force, making predictions for next year’s housing and mortgage markets on business television and in the papers. Predictions for 2011 are wide-ranging: Some say home prices will rise in 2011 Some say home prices will fall in 2011 Some say mortgage rates will rise in 2011 Some say mortgage rates will fall in 2011 The problem with housing and mortgage predictions is that — like all predictions — they’re just educated guesses about the future. Nobody knows what will really happen with the housing and mortgage markets in 2011. All anyone can do is theorize. As laypersons, though, it can be hard to separate theory from fact. Television can make that task even more difficult at times. As an example, when a well-dressed economist goes on CNBC and presents a clear, succinct argument for why home prices will fall on 2011, we’re inclined to believe the analysis and conclusion. After all, the outcome seems plausible outcome given the facts. But then, immediately after, a different economist presents an opposite argument — that home prices will rise in 2011 – and her analysis seems sound, too. Even Freddie Mac can’t see the future. Last year, the government group predicted mortgage rates to 6 percent in 2010. That never happened, of course. Instead, conforming mortgage rates dropped over a 7-month period this year to levels best be described as “historic”. Freddie Mac couldn’t have been more wrong. So, what’s a Bangor homeowner to believe? About the only thing that’s certain right now is that mortgage rates remain low by historical standards, and that home prices do, too. Also, that both housing and mortgage markets appear to be riding momentum higher into 2011. This suggests that it will be more expensive to buy and finance a home by the end of 2011. Until that time, however, predictions are just guesses. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

New Home Sales Rise In November; Hint At Strong Winter 2011

Shannon Odom (Northeast Bank) — Tue, 28 Dec 2010 04:55:20 -0800

Like most housing data in November, the most recent New Home Sales report showed sales volume increasing last month, and home supplies falling. According to the U.S. Department of Commerce, sales of new, single-family homes increased to 290,000 in November on an annual basis, a figure equal to the New Home Sales 6-month rolling average, and a 6 percent improvement from October. At the current pace of sales, the national supply of new homes for sale will be exhausted in 8.2 months — a strong 0.6-month improvement from October. This data is consistent with the most recent Existing Home Sales report. It showed sales volume rising 6 percent, too, and a similarly-strong inventory drop. For the housing market in Belfast , it’s another step in the right direction. Since May’s post-tax credit plunge, home prices have stabilized and a foundation for growth has been built. Home builder confidence data highlights this point. Also interesting in the November New Home Sales report is the volume breakdown by price point. Less expensive homes powered the market: Homes under $200,000 : 47 percent of all sales Homes between $200,000-$299,999 : 29 percent of all sales Homes between $300,000-$399,999 : 14 percent of all sales Luxury homes accounted for less than 2 percent of sales last month suggesting that builders count first-time and move-up buyers as their core market. As 2010 comes to a close, housing looks poised for a rebound. Sales in all categories are improving, relative to 6 months ago, and the economy is improving. In conjunction with rising mortgage rates, the best time to buy a new home may be now. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

What’s Ahead For Mortgage Rates This Week : December 27, 2010

Shannon Odom (Northeast Bank) — Mon, 27 Dec 2010 01:29:52 -0800

Mortgage markets worsened again last week as the holiday-shortened sessions did little to buck recent momentum. Although Freddie Mac reported mortgage rates dropping 0.02% from the week prior, loan officers on the street will report the opposite. Rates did not fall last week. Conforming mortgage rates in Maine moved higher for 7th straight week. For rate shoppers and home buyers, it’s been a harrowing two months. Since the Federal Reserve announced its QE2 program November 3, 2010, mortgage rates have moved from all-time lows to 7-month highs. Mortgage payments now cost $38 more per month per $100,000 borrowed as compared to the day before the stimulus was announced. Mortgage rates look poised to increase again. Here’s why. A major reason why mortgage rates were so low, for so long, was that the U.S. economy was suffering. Consumer spending was slow, business forecasts were dour, and job growth was negative. These conditions lasted for longer than a year. Lately, however, the conditions are changing: Consumer spending is up 5 months in a row (Bloomberg) Fannie Mae is boosting its economic outlook for 2011 (WSJ) Job growth is slow, but positive (Reuters) And, furthermore, housing appears to be on solid ground. Existing Home Sales and New Home Sales improved last month, and home supplies are dropping. This, too, is good for the economy, which, in turn, is bad for mortgage rates. This week, don’t be surprised is mortgage rates rise again. The week is again shortened by holiday and there’s a host of new data that may signal economic improvement including Pending Home Sales, consumer confidence surveys and the Case-Shiller Index. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Home Inventory Dwindles Into The New Year

Shannon Odom (Northeast Bank) — Thu, 23 Dec 2010 03:23:32 -0800

Existing Home Sales jumped another 6 percent in November, the report’s third month of improvement since bottoming in July. According to the National Association of REALTORS®, a quarter-million more existing homes were sold during the annual period ending in November as compared to October. An “existing home” is a home that cannot be considered new construction. Additionally, the national housing supply dropped by a full month. At the current pace of existing home sales, the complete stock of homes for sale will be exhausted in 9.5 months. November’s strong housing data is yet another signal to buyers in Houlton that the housing market’s foundation has been rebuilt, and that a rebound is imminent. It’s helped that there are great “deals” on which for buyers to pounce. In November, short sales and foreclosures accounted for one-third of all existing homes sold, and carried an average price discount of 10 percent and 15 percent, respectively, as compared to non-distressed sales. Repeat buyers continue to power the market, too, representing more than half of all home buyers. First-time buyers : 32% of all buyers Investors : 19% of all buyers Repeat buyers : 51% of all buyers This breakdown suggests that housing has regained its footing. First-time buyers can’t support a market long-term like repeat buyers can and, as compared to 12 months ago, the percentage of repeat buyers is now up 14 points. Home buyers take note. Raw sales volume is rising and available inventory is dropping. Basic supply-and-demand tells us that this will lead home prices higher. Furthermore, mortgage rates are rising quickly, increasing the cost of homeownership. If buying a home is a part of your plan for 2011, consider accelerating your purchase time frame. Existing homes account for more than 80% of homes sold nationwide. If the market keeps improving like this, your home affordability will worsen.

Housing Starts Rise In November, But With A High Margin Of Error

Shannon Odom (Northeast Bank) — Wed, 22 Dec 2010 02:58:54 -0800

The number of single-family Housing Starts increased in November, adding 30,000 units as compared to October. The Census Bureau defines a “housing start” as a home on which construction has started. November’s starts represents a 7 percent increase from the month prior. However, if you see the Housing Starts story online or in the papers, you’ll notice that the press is calling the market gain at 4 percent. So which result is right? The answer is both. The government’s monthly Housing Starts data is published as a composite report; lumping activity among 3 separate housing types into a single, group reading. The 3 housing types are: Single-family homes (i.e. 1-unit) Multi-unit homes (i.e. 2-4 units) Apartments (5 units or more) The group reading is a fair description of the market and it’s easy-to-understand. As a result, it’s what the press tends to report. However, for home buyers in Maine , it’s the single-family category that’s most relevant. The reason why single-family homes accounted for 84% of November’s Housing Starts is because that’s the type of home that most buyers buy. Few purchase 2-4 unit properties, and even fewer buy entire apartment complexes. That said, it’s possible that November’s Housing Starts data is wrong. Within the press release, the government placed an asterisk next to the data, indicating that the figure’s margin of error exceeds its actual measurement. Against a 7 percent gain, the reported margin of error is 13.5%. There is no statistical evidence, therefore, to prove the actual change was different from zero. If Housing Starts did fall in November, it will help to reduce the Belfast housing inventory, which will, in turn, help keep home prices high. For home sellers, this could mean good news. Fewer homes for sale increase competition among buyers. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Foreclosure Activity Plunges (But With An Asterisk)

Shannon Odom (Northeast Bank) — Tue, 21 Dec 2010 03:25:14 -0800

According to foreclosure-tracking firm RealtyTrac, the foreclosure filings fell 21 percent in November to 262,339 units nationwide. A foreclosure filing is defined as default notice, scheduled auction, or bank repossession. November marked the first time since February 2009 that the number of monthly filings failed to surpass 300,000 units. There were other notable November statistics, too, included: November’s 21 percent month-to-month decrease was the largest in RealtyTrac’s recorded history November’s 14 percent year-to-year decrease was the largest in RealtyTrac’s recorded history Nevada led the nation in foreclosure activity for the 47th straight month However, we can’t read into November’s RealtyTrac report too much; ultimately, history may treat it with an asterisk. Controversy surrounding the so-called robo-signers forced some of the biggest banks to institute a temporary halt to foreclosures in November. Foreclosure activity did fall last month, but the moratorium makes the figures look better for housing than if there had been no interference. The halt in foreclosures is also why Utah leaped into the #2 state for foreclosures nationwide. Perennial foreclosure-leading states like California, Michigan and Arizona posted double-digit improvements in November whereas Utah did not. Banks have since resumed foreclosure activity so December’s results may be a better gauge for how the market is truly performing. Foreclosures tend to be sold at discount and low home prices can entice home buyers to make an offer. If you’re such a buyer in Belfast and want to look at foreclosed homes, talk to a real estate agent first. Although there’s a host of online search engines that specialize in foreclosures, a licensed agent may have access to broader inventory, plus the ability to negotiate it more effectively. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

What’s Ahead For Mortgage Rates This Week : December 20, 2010

Shannon Odom (Northeast Bank) — Mon, 20 Dec 2010 01:11:51 -0800

Mortgage markets worsened again last week as belief in a U.S. recovery and concerns for inflation took hold on Wall Street. Conforming mortgage rates rose in Maine for the 6th straight week. According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage is 0.66% higher this week as compared to rates on November 11, but loan originators will tell you that figure is understated. Real mortgage rates — mortgage rates available to everyday homeowners and buyers in Belfast are up by as much as a full percentage point since November, and loan costs are rising, too. The Refi Boom of 2010 is over. Last week, mortgage markets revolved around the Federal Open Market Committee. The FOMC met Tuesday and voted to leave the Fed Funds Rate unchanged within a target range of 0.000-0.250. This was expected. However, markets seemed to be surprised by the Fed’s take on inflation. In its press release, the Fed said inflation is running too low to benefit the economy. Its policies, including the group’s $600 billion bond market program, may be meant to spark inflation, then. This would lead mortgage rates higher and Wall Street knows it. Mortgage rates spiked after the Fed adjourned. This week, with a sparse data schedule and trade volume thinning because of holidays, expect mortgage rates to be volatile. Although rates are higher since 7 weeks ago, they remain low, historically. There’s still a chance to capitalize on the lowest mortgage rates in decades. If you haven’t refinanced this year and want to know what’s available, talk to your loan officer right away. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Why Builder Confidence Surveys Matter To Buyers Of New Homes

Shannon Odom (Northeast Bank) — Fri, 17 Dec 2010 01:17:06 -0800

Home builder confidence is holding firm this month, according to the National Association of Home Builders. The group’s monthly Housing Market Index survey posted 16 for December. That’s the same value as from November. It’s also equal to this 2010′s average HMI reading. HMI is scored on a scale of 1-100, and is a composite of 3 separate home builder surveys measuring single-family sales; projected single-family sales over the next six months; and prospective buyer foot traffic. The results of the 3 surveys were as follows: Single-Family Sales : 16 (unchanged from November) Projected Single-Family Sales : 25 (unchanged from November) Prospective Buyer Foot Traffic : 11 (from 12 in November) Values of 50 or better indicate favorable conditions for home builders. Values below 50 indicate unfavorable conditions. In other words, although improving, conditions for home builders remain less from excellent. Home buyers in Bangor can use this to their advantage. When builders feel pressure from the market, they’re more likely to offer discounts. On the other hand, job growth is returning, the economy is expanding, and mortgage rates are rising. These 3 factors are thought to boost housing markets. So, despite an unfavorable HMI reading, home builders might still less willing to “make a deal”; holding out for a better 2011. November’s strong Housing Starts data supports that line of thinking. If you’re buying a newly-built home , or expect to buy sometime in 2011, keep an eye on home builder sentiment surveys. The better the builders feel, the more you may be asked to pay to buy your next home. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Simple Real Estate Definitions : Loan-Level Pricing Adjustments

Shannon Odom (Northeast Bank) — Thu, 16 Dec 2010 01:13:23 -0800

Loan-level pricing adjustments are mandatory loan fees based on a borrower’s specific default risk. First introduced in 2008, LLPAs were Fannie Mae’s and Freddie Mac’s logical response to massive balance sheet losses. At the time, the housing market was deteriorating and mortgage delinquencies were rising. To “better align with loan risk characteristics”, the two entities created specific fees to be associated to specific loan traits, to be charged to all borrowers. LLPAs are still in existence today. Today’s loan-level pricing adjustments can be grouped into 5 basic categories. Application exhibiting any of the 5 traits can trigger LLPAs, adding to a borrower’s loan fees: Credit Score (i.e. the borrower’s FICO is below 740) Property Type (i.e. the subject property is multi-unit) Occupancy (i.e. the subject property is an investment home) Structure (i.e. there is a subordinate/junior lien on title) Equity (i.e. mortgage insurance is required by the lender) In many respects, loan-level pricing adjustment are similar to auto insurance. All things equal, the driver of a “fast” car will pay higher costs than the driver of a “safe” car. The same is true for mortgages. Loan-level pricing adjustments are public information. Fannie Mae publishes the complete LLPA matrix on its website. The chart can be confusing, however. If you have questions about how LLPAs work, talk with your loan officer. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

A Simple Explanation Of The Federal Reserve Statement (December 14, 2010 Edition)

Shannon Odom (Northeast Bank) — Tue, 14 Dec 2010 07:23:04 -0800

Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its target range of 0.000-0.250 percent. In its press release, the FOMC noted that since November’s meeting, the “economic recovery is continuing”, but at a pace deemed too slow to make a material impact on unemployment rates. It also said that household spending in increasing, but remains constrained by joblessness, tight credit and lower housing wealth. In addition, the Fed used its press release to re-affirm its plan to keep the Fed Funds Rate near zero percent “for an extended period” while also opting to keep its $600 billion bond market support package in place. And lastly, of particular interest to home buyers and mortgage rate shoppers, the FOMC statement devoted an entire paragraph to the Federal Reserve’s dual mandate of keeping inflation and employment at acceptable levels. The Fed acknowledges making progress toward this goal, but calls it “disappointingly slow”. Currently, inflation is too low for what the Fed deems acceptable, and unemployment is too high. Over time, the Fed expects both measurements to improve. Mortgage market reaction to the FOMC statement has been negative thus far. Mortgage rates in Belfast are unchanged post-FOMC, but appear poised to worsen. The FOMC’s next scheduled meeting is a 2-day affair, January 25-26, 2011. It’s the first scheduled meeting of 2011. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Make A Mortgage Rate Strategy Ahead Of Today’s Fed Meeting

Shannon Odom (Northeast Bank) — Tue, 14 Dec 2010 07:21:50 -0800

The Federal Open Market Committee holds a one-day meeting today, its 8th scheduled meeting of the year and 10th overall. The FOMC is part of the Federal Reserve, the government group that sets U.S. monetary policy. The Fed’s primary policy-setting tool is an interest rate known as the Fed Funds Rate. The Fed Funds Rate is the interest rate at which banks borrow money from each other. 2 years ago Thursday, in an effort to jump-start the economy, the FOMC met and voted to lower the Fed Funds Rate to as close to zero percent as possible without actually going to zero percent; the benchmark rate was prescribed to a range of 0.000-0.250 percent. The Fed Funds Rate had never been set so low before, but ever since, it’s been held to that range. It will likely be there until early-2011, too, but that doesn’t mean that mortgage rates won’t change today when the Fed adjourns today. Because the Fed Funds Rate has been so low for so long, businesses and consumers have been able to borrow money cheaply. As a result, both capital and household spending have been on the rise lately, creating tailwinds for the economy. The Fed is expected to acknowledge this today which, in turn, should lead mortgage rates higher. This is because, in the current recovery cycle and until markets find balance, what’s good for the economy tends to be bad for rates in Bangor. The Fed’s press release today will be a focal point for markets. Talk of higher-than-expected inflation or better-than-expected growth, and mortgage rates should rise. Talk of a slowdown should lead rates lower. Either way, we can’t be certain what the Fed will say — or do — this afternoon. If you’re floating a mortgage rate, the safe move is to lock before 2:15 PM ET today. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

What’s Ahead For Mortgage Rates This Week : December 13, 2010

Shannon Odom (Northeast Bank) — Mon, 13 Dec 2010 07:26:49 -0800

Mortgage markets worsened last week as the U.S. economy showed additional signs of strength; and global demand for mortgage bonds slipped. Conforming mortgage rates rose in Maine and around the country for the fifth straight week. It’s a streak that’s been marked by volatile pricing that’s rendered rate shopping difficult. Last week, lenders published as many as 5 rate sheets per day where, by comparison, over the past 12 months, lenders have averaged closer to 2 rate sheets per day. This week, with a bevy of data set for release and a Federal Open Market Committee meeting, expect volatility to remain high. Wall Street remains undecided on the future of the U.S. economy and there will be plenty on information on which to trade: Tuesday : Producer Price Index, Retail Sales Wednesday : Consumer Price Index, Housing Market Index Thursday : Housing Starts, Initial and Continuing Jobless Claims Despite the high impact of this week’s economic releases, though, it will be Tuesday’s FOMC meeting that sets the tone for the mortgage bond market and, consequently, for mortgage rates in Bangor. The Fed’s last meeting in early-November provided the spark to the recent rise in mortgage rates. In the group’s post-meeting press release, it acknowledged growth while committing $600 billion to bond markets. The move triggered a massive bond sell-off that has since pushed conforming mortgage rates to a 5-month high. The Fed adjourns at 2:15 PM ET Tuesday afternoon. If you’re still floating a mortgage rate or have otherwise yet to lock, consider executing a rate lock agreement early in the week. Once the Federal Open Market Committee adjourns, mortgage rates could spike again. And, although rates are up since November, they remain historically low. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Fannie Mae Guidelines Change Monday. Apply Today To Lock In To “Old” Rules.

Shannon Odom (Northeast Bank) — Fri, 10 Dec 2010 00:58:59 -0800

Fannie Mae rolls out new mortgage guidelines Monday. Therefore, if you’re in the process of applying for a conforming home loan, consider giving your complete application by the close of business Friday. All Fannie Mae applications taken on, or after, December 13, 2010, are subject to the changes. As compared to mortgage guidelines updates of the last 3 years, Monday’s roll-out is relatively small. There is no change to the maximum debt-to-income ratio, for example; nor is there an increase in the minimum FICO score requirement. Most mortgage applicants in Houlton and nationwide will be unaffected. Others, however, will find getting approved to be more difficult. The most major change is with respect to revolving and installment debt. This category includes credit cards, charge cards, and student loans, among others. Going forward: Debt with fewer than 10 payments remaining must now be included in an applicant’s monthly obligations. Debt not reporting a monthly payment must be assigned a payment equal to 5% of the outstanding credit balance. These edits will raise applicants’ debt-to-income ratios, and may push some of them beyond the maximum allowable limits, resulting in a denial. People with relatively large car payments are especially susceptible. Another change relates to receiving gift funds for a purchase. Unlike debt calculations, though, the “gifting” process is getting easier. Under the new Fannie Mae guidelines, buyers of owner-occupied, 1-unit properties (i.e. single-family homes, condos, townhomes) can forgo Fannie Mae’s customary, minimum 5% downpayment contribution from personal funds. Downpayments can be comprised 100 percent of gifted and/or granted monies. Buyers of second or investment homes, or multi-unit properties must still make a 5% downpayment from their own funds. And, lastly, Fannie Mae is easing some of its documentation requirements. Salaried applicants from whom commissions and/or bonuses paid account for less than 25% of annual income will have fewer paystubs to produce for underwriting. Fannie Mae’s complete guideline changes are available online at http://efanniemae.com. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Home Affordability Reaches Record-Levels… Last Quarter.

Shannon Odom (Northeast Bank) — Thu, 09 Dec 2010 04:49:20 -0800

Last quarter, with home prices still relatively low and mortgage rates making new, all-time lows almost weekly, the cost of home ownership was extraordinarily low in Maine and most U.S. markets. According to the National Association of Home Builders’ quarterly Home Opportunity Index, 72.5 percent of all new and existing homes sold between June-September 2010 were affordable to families earning the national median income. This ties the all-time high for home affordability, set in the first quarter of 2009. The data also underscores that, when compared to historical norms, it’s a fantastic time to be a Houlton home buyer. Prior to 2009, the Home Opportunity Index rarely topped 65. The index has remained above 70 ever since. All real estate is local, though, and on a city-by-city basis, home affordability varied last quarter. For example, 96% of homes sold in Kokomo, IN are affordable for families earning the area’s median income. This handily beat the average figure and led the nation. Looking at major cities, Indianapolis led the pack. 93% of homes in Indianapolis are affordable to families earning the area’s median income. This ranks #9 nationwide. On the opposite end of the affordability scale is the New York-White Plains, NY-Wayne, NJ region. For the 10th consecutive quarter, the New York Metro region ranks last in U.S. home affordability. Just 23% of homes are affordable to families earning the local median income, although this is 3 points higher versus Q1 2010. The rankings for all 225 metro areas are available online. Regardless of where your hometown ranks relative to its neighbors, home affordability remains high as compared to historical values. That said, with mortgage rates rising and home sales expected to climb this winter, it’s unlikely that the Home Opportunity Index will improve. Buying a home may never be this inexpensive again. If you planned to buy in mid-2011, consider moving up your time frame. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Boost Your 2010 Tax Deductions By Making Your January Mortgage Payment A Little Bit Early

Shannon Odom (Northeast Bank) — Wed, 08 Dec 2010 01:01:39 -0800

Looking for an extra 2010 tax deduction? Consider making your January mortgage payment a few days early. It’s a simple strategy that works because of how mortgage interest works. Unlike rent which is paid in advance at the start of a month, mortgage interest is only paid after it’s been borrowed. Your January mortgage payment, therefore, accounts for the interest that accrued in December. And for a lot of Bangor homeowners, that mortgage interest is tax-deductible. By making January’s mortgage payment in December, eligible homeowners can apply the interest paid to 2010′s tax returns instead of waiting to claim the same deduction against 2011. Don’t cut it close, though. It’s best to remit payment prior to the last week of the month, leaving your servicer ample time to receive and process your paperwork. Most importantly, though, before prepaying on your mortgage, talk to your tax professional. Not every homeowner is eligible for mortgage interest tax deductions, nor should every homeowner itemize their respective tax deductions. The “pay early” plan could be a wasted effort for you, ultimately, depending on your taxpayer profile. If you don’t have an accountant that you trust, call or email me anytime; I’m happy to make a recommendation to you. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com

Pending Home Sales Index Points To A Budding Seller’s Market

Shannon Odom (Northeast Bank) — Tue, 07 Dec 2010 02:14:12 -0800

The Pending Home Sales Index surged 10 percent in October as low mortgage rates and low home prices spurred Bangor buyers into action. A “pending home sale” is an existing home under contract to sell, but not yet closed. The Pending Home Sales Index is at its highest level since April 2010 — the contract deadline date for this year’s federal home buyer tax credit program. The jump may also explain why home builder confidence is rising even as the number of new homes sold fades. Builders are seeing buyers’ renewed interest in housing first-hand and expect the next 6 months to be dramatically better. On a regional basis, gains in October’s Pending Home Sales Index varied as compared to September. The Midwest led the charge, and the West was the laggard. Northeast Region: +19.6% Midwest Region : +27.3% South Region : +7.1% West Region : -0.4% Home buyers should take last month’s Pending Home Sales Index to heart. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days, so we can reasonably expect November’s and December’s existing homes sales data to be similarly strong. In other words, the housing market is heating up and may have already shifting toward sellers. Changes like that lower buyer leverage, and increase the cost of homeownership. Coupled with rising mortgage rates, the shift is even more defined. The best time to buy a home this year may have already passed. The next best time may be right now. Talk to your real estate agent if you’re planning to buy a home in 2011. It may be smart to move up your time frame. <:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:>:<:> Shannon Odom Mortgage Loan Officer Northeast Bank 277 State Street Suite 3B Bangor, ME 04401 P: 207-217-6750 C: 207-561-0944 F: 888-600-5335 smodom@northeastbank.com