Pending Home Sales Index Rises Back Above 100

Low home prices and mortgage rates have combined to push home affordability to record levels nationwide. Home buyers are taking advantage.

The Pending Home Sales Index rose 7 percent in November to rise to its highest level since April 2010, the last month of last year's home buyer tax credit program. 

The Pending Home Sales Index is published monthly by the National Association of REALTORS®. It measures homes under contract nationwide, but not yet "sold". 

In this way, the Pending Home Sales Index is different from other housing market indicators. It's a "forward-looking" figure; a predictor of future home sales. According to the National Association of REALTORS®, more than 80% of homes under contract close within 60 days. 

By contrast, housing data such as the Existing Home Sales report and the New Home Sales report "look back".

November marks the second straight month of Pending Home Sales Index improvement. The housing market metric made big gains of 10 percent in October 2011, as well.

On a regional basis, each part of the country showed an increase in homes under contract.

• Northeast Region: +8.1 percent from October 2011
• Midwest Region : +3.3 percent from October 2011 
• South Region : +4.3 percent from October 2011
• West Region : +14.9 percent from October 2011

However, here in Santa Clara, we must discount the value of even the regional data, somewhat. Like else in real estate, the volume of homes going under contract vary by locality.

Throughout the West Region, for example, the region in which pending home sales increased the most from October, there are nearly a dozen states. Undoubtedly, some of those states performed better than others in terms of "homes under contract", but we don't have an indication of which states those were.

In addition, within each state, every city, town, and neighborhood realized its own unique market in November, and produced its own sales statistics.

For buyers and sellers throughout California and the country, therefore, it's more important to watch data on a local level than on a national one. Reports like the Pending Home Sales Index are helpful in showing national trends, but as an individual, what you need are local trends.

For local real estate data, be sure to ask your agent.

Nationally, Home Prices Off 18.3 Percent From April 2007 Peak

The government confirms what the private-sector Case-Shiller Index reported yesterday. Nationwide, average home values slipped in October.

The Federal Home Finance Agency's Home Price Index shows home values down 0.2% on a monthly, seasonally-adjusted basis. October marks just the second time since April that home values fell month-over-month.

The Case-Shiller Index 20-City Composite showed values down 0.7 percent from September to October.

As a home buyer in Santa Clara , it's easy to look at these numbers and think housing markets are down. Ultimately, that may prove true. However, before we take the FHFA's October Home Price Index at face value, we have to consider the report's flaws.

There are three of them -- and they're glaring. As we address them, it becomes clear that the Home Price Index -- like the Case-Shiller Index -- is of little use to everyday buyers and sellers in places like Willow Glen.

First, the FHFA Home Price Index only tracks home values for homes backed by Fannie Mae or Freddie Mac mortgages. This means that homes backed by the FHA, for example, are specifically not computed in the monthly Home Price Index.

In 2007, this was not as big of an issue as it is today. in 2007, the FHA insured just 4 percent of the housing market. Today, the FHA is estimated to have more than one-third of the overall housing market.

This means that one-third of all home sales are excluded from the HPI -- a huge exclusion.

Second, the FHFA Home Price Index excludes new home sales and cash purchases, accounting for home resales backed by mortgages only. New home sales is a growing part of the market, and cash sales topped 29 percent in October 2011.

Third, the Home Price Index is on a 60-day delay. The above report is for homes that closed in October. It's nearly January now. Market momentum is different now. Existing Home Sales and New Home Sales have been rising; homebuilder confidence is up; Housing Starts are showing strength. In addition, the Pending Home Sales Index points to a strong year-end.

The Home Price Index doesn't capture this news. It's reporting on expired market conditions instead.

For local, up-to-the-minute housing market data, skip past the national data. You'll get better, more relevant facts from a local real estate agent.

Since peaking in April 2007, the FHFA's Home Price Index is off 18.3 percent.

New Home Sales Approach Bull Market Territory

New home inventory is approaching bull market territory.

According to the Census Bureau, the number of new homes sold rose 2 percent in November. On a seasonally-adjusted, annualized basis, home buyers bought 315,000 newly-built homes last month.

November's New Home Sales data marks the 4th straight month of rising sales volume, lifting the housing-market metric to a 7-month high, and adding to the housing market's recent show of strength. 

Last week, we learned that Existing Home Sales also climbed in November.

The big story in the New Home Sales report, though, is the remaining new home supply nationwide.

With just 158,000 homes "on the market" and the pace of home sales hastening, the complete, national inventory of "new homes" would now be sold in just 6.0 months, a 0.2-month improvement from October. This is the quickest home sales pace in nearly 6 years for the new construction market. 

It's even faster than in April 2010 -- the buyer-deadline month of last year's federal home buyer tax credit.

Home builders expect the trend to continue, too. Buyer foot traffic is on the rise and builders have a strong outlook for the next 6 months.

It's an unsettling series of developments for today's San Jose home buyers. As home supplies drop and builders gain confidence, the ability of an buyer to negotiate for price reduction and/or upgrades shrinks.

If you're a home buyer in search of new construction, therefore, consider that the best new construction "deals" of the next 12 months may be the ones you find today.

America's To 10 Safest Cities, Ranked

Looking for safe cities in which to live? A recent study may help you.

Titled "America's Safest Cities", Forbes Magazine compiled data from more than 70 cities with populations of 250,000 or more, and ranked them by violent crime rate as reported by the Federal Bureau of Investigation.

A "violent crime" is one that can be categorized as murder, robbery, and assault, among others. Then, for each metropolis, local traffic-fatality rates were added to the area's violent crime rate, and averaged into the data.

Forbes presents the 10 safest large cities in America as :

1. Plano, Texas
2. Henderson, Nevada
3. Honolulu, Hawaii
4. Santa Ana, California
5. Lincoln, Nebraska
6. San Jose, California
7. Mesa. Arizona
8. Colorado Springs, Colorado
9. Aurora, Colorado
10. New York, New York

Forbes is quick to note that "gridlocked" traffic patterns help keep cities safe; which may explain why cities like Honolulu and New York City made the Top 10. When cars are forced to move more slowly, the report states, traffic-related fatalities tend to plummet.

Don't rush to make a home-buying decision based on Forbes data alone, however. Like everything else in real estate, data is local and city-wide statistics are too broad to be helpful to an everyday buyer in Santa Clara.

For accurate, real-time, local crime data, be sure to ask a real estate profession.

Pay Your Mortgage Early, Boost Your 2011 Federal Income Tax Deductions

Time is running out to boost to your 2011 federal tax refund. All you have to do is make your January 2012 mortgage payment while it's still December.

It's a simple tax strategy that works because of how mortgage interest is paid, and of how the U.S. tax code is written.

Different from rent which is paid for the month ahead (i.e. "you're paying January's rent"), mortgage payments are made only after mortgage interest has accrued (i.e. "you're paying for money you've already borrowed from the bank").

This is called "paying interest in arrears" and U.S. tax code states that the mortgage interest is tax-deductible in its year paid, subject to limitations.

By making the January 2012 mortgage payment in December 2011, therefore, homeowners who itemize their on their tax returns can apply their January mortgage payment's interest portion to their 2011's tax returns.

The alternative is to pay the mortgage on schedule, and wait for April 15, 2013 to claim the credit.

If you choose to pre-pay your mortgage and typically send your payment via USPS, give your check ample time to be delivered to your lender, and processed. Mail your check no later than Saturday, December 24.

For San Jose homeowners that pay electronically, the process is simpler. Edit your online bill pay program to have your mortgage payment post no later than Thursday, December 29.

Make note, however. Not all mortgage interest is eligible for tax-deductibility, and not all homeowners throughout the state of California who pay mortgage interest should itemize said interest on their tax returns.

Before prepaying on your mortgage, ask your tax professional for advice.

Home Supplies Fall To 7.0 Months Nationwide; Buyer Demand Strong

Home resales moved to a 10-month high in November, the latest in a series of strong showings from the housing sector.

According to the National Association of REALTORS®, November's Existing Home Sales rose to a seasonally-adjusted, annualized 4.42 million units nationwide --  a 4 percent climb from October 2011.

An "existing home" is a home that has been previously occupied and cannot be categorized as new construction.

Home buyers and sellers throughout San Jose should take note of November's numbers because -- behind the headlines -- there's a series of statistics that foretell higher home prices ahead.

First, the total number of homes for sale nationwide dipped to 2.58 million, an 18% reduction from November 2010 and represents the fewest number of homes for sale since February 2007. 

At the current sales pace, the complete home resale inventory would be sold in 7.0 months.

And, second, the real estate trade group reports that 33% of all homes under contract "failed" for some reason last month.

Contract failures can occur because of mortgage denials in underwriting; home inspection issues; and homes appraising for less than their respective purchase prices.

In other words, despite a reduction in the number of homes for sale, and a rash of failed contracts, Existing Home Sales volume is still on the rise.

Broken-down by buyer-type, here's to whom home sellers were selling in November :

• First-time buyers : 35% of home resales, up from 34% in October 2011
• Repeat buyers : 46% of home resales, down from 48% in October 2011
• Investor buyers : 19% of home resales, up from 18% in October 2011

Given high demand for home resales and shrinking home supplies, we should expect that Willow Glen home prices will rise through December 2011 and into early-2012, at least. Recent Housing Starts data supports this notion. 

Thankfully, mortgage rates remain low. Low mortgage rates help keep homes affordable.

Housing Starts Show Strength In Housing

The new construction housing market continues to show strength across the country.

According to the U.S. Census Bureau, Single-Family Housing Starts rose to 447,000 units on a seasonally-adjusted, annualized basis in November -- a 2 percent increase from October.

A "Housing Start" is defined as breaking ground on new home construction.

November's figures mark the third straight month of Single-Family Housing Starts gains. The new construction metric is now 15 percent above its all-time low, set in February of this year.

None of this should be a surprise to new home buyers in San Jose.

Housing data has been trending better since September with sales volumes rising and home inventories falling. Basic economics tells us that home prices should soon rise.

The good news is that low mortgage rates should keep homes affordable.

Since mid-November, the average, conventional 30-year fixed rate mortgage has hovered near 4.000% nationwide with an accompanying 0.7 discount points plus closing costs. 1 discount point equals one percent of your loan size. This is down from near 4.500% six months ago, and the drop has made a big impact on home affordability. 

• June 2011 : $200,000 mortgage costs $1,013.37 per month
• December 2011 : $200,000 mortgage costs $954.83 per month

This represents $700 in savings per year. It's no wonder home builders report the highest buyer foot traffic in 3 years. 

Meanwhile, the market shows little signs of slowing down. Building Permits are on the rise, too.

Permits for single-family homes rose to their highest levels of year in November and 89 percent of those homes will start construction within 60 days. This means that Single-Family Housing Starts should stay strong through the early part of 2012, and into the spring.

If you're planning to buy new construction in California , therefore, talk to your real estate agent soon and consider moving up your time frame. With mortgage rates low and next year's buying season approaching, you may find that the best "deals" will come within the next few weeks only.

Home Builders Experiencing Heavy Foot Traffic And Higher Sales Volume

In another good sign for the housing market, today's home builders believe that the housing market has turned a corner.

For the third straight month, the Housing Market Index -- a home builder confidence survey from the National Association of Homebuilders -- reported strong monthly gains.

December's Housing Market Index climbed 2 points to 21 in December after a downward revision to last month's results. The index is now up seven points since September 2011, and sits at a 19-month high.

When home builder confidence reads 50 or better, it reflects favorable conditions in the single-family new home market. Readings below 50 reflect unfavorable conditions.

The Housing Market Index has not crossed 50 since April 2006.

The HMI itself is actually a composite reading; the result of three related home builder surveys. The National Association of Homebuilders asks its members about their current single-family home sales volume; their projected single-family home sales volume for the next 6 months; and their current buyer "foot traffic".

The results are compiled into the single Housing Market Index tally.

In December, builder survey responses showed strength across all 3 questions :

• Current Single-Family Sales : 22 (+2 from November)
• Projected Single-Family Sales : 26 (+1 from November)
• Buyer Foot Traffic : 18 (+3 from November)

These results support the recent New Home Sales and Housing Starts data, both of which show an increase in single-family sales, and a decrease in new home housing supply.

When demand rises and supplies fall, home prices climb.

It's also noteworthy that the Housing Market Index put buyer foot traffic at newly-built homes at its highest level since May 2008. With even more buyers expected to enter the market, new home prices are expected to rise across San Jose in 2012 -- especially in the face of shrinking home supplies. 

For now, though, with home prices stable and mortgage rates low, buyers can grab "a deal". 60 days forward, though, may be too late.

The Spring Buying Season unofficially starts February 6, 2012. 

How To Keep Your Dishwasher Mold- and Mildew-Free

Your dishwasher is a breeding ground for mold and mildew. It's warm, it's dark, and there is a bevy of decaying, organic material in the form of both food particles and soap.

Therefore, you'll want to periodically scrub and disinfect your dishwasher so that it remains it clean and healthy, and so that your dishes stay that way, too.

Here's how to clean your dishwasher :

1. Remove all racks from the dishwasher. Wash with dish-washing detergent and set aside to dry. 
2. Mix 1 part vinegar with 4 parts very hot water into a spray bottle.
3. Spray the mixture on the dishwasher seal and anywhere else you see discoloration, mold or mildew.
4. Scrub the affected areas with a non-abrasive scrub brush.
5. Replace racks in the dishwasher.
6. Fill a small, dishwasher-safe bowl with white vinegar and place on the top rack.
7. Without soap, run the dishwasher at the highest temperature setting available.

Then, after performing these steps, you find that your dishwasher still has an "odor", or if mold or mildew remnants remain, immediately pour 1 cup of baking soda on the floor of your dishwasher, and run the cycle a second time at the highest temperature setting available.

If your mold/mildew problem persists, you should check the dishwasher's drain line. If it's kinked, water may be unable to drain and will pool at the bottom of your dishwasher -- a mold-breeding situation.

You should also check the food trap at the base of the dishwasher for too-large-to-drain pieces of food.

A good dishwasher will last years with proper care and maintenance. Keep yours mold- and mildew-free. 

Mortgage Payments Fall 12% Since February 2011

As mortgage rates drop, so do housing payments. It's a good time to consider refinancing your home, or making an offer on a new one. Mortgage payment affordability has never been so high in history.

According to Freddie Mac, the average 30-year fixed rate mortgage rate is now 3.94 percent -- an all-time low -- with an accompanying 0.8 discount points. This means that in order to get access to the 3.94 percent rate, San Jose  homeowners and home buyers should expect to pay a loan fee equal to 0.8% of the borrowed amount, plus "normal" closing costs.

Last week, the average 30-year fixed rate mortgage rate was 3.99 percent with an accompanying 0.7 discount points.

Mortgage rates in California have been in decline for most of the year. Since peaking in early-February, the average home owner's principal + interest payment on a 30-year fixed rate mortgage had now dropped by 12.2 percent.

Here is how mortgage payments compare, then and now, not accounting for your individual tax-and-insurance escrow :

• February 10, 2011 : Payment of $539.88 per $100,000 borrowed
• December 15, 2011 : Payment of $473.96 per $100,000 borrowed

For existing homeowners, the dramatic drop in payments is reason to reach out to your loan officer. A refinance could save you tens of thousands of dollars over the life of your loan -- especially if you chose to refinance your mortgage into a 15-year program.

The 15-year mortgage, says Freddie Mac, is also at an all-time low, registering 3.21 percent with 0.8 discount points, on average.

For home buyers, today's low rates present an interesting opportunity.

Mortgage rates are the key factor in determining your monthly housing payment so, with average mortgage rates below 4 percent, it's no wonder home affordability is cresting. However, the housing market is showing signs of recovery. Home supplies are dwindling, buyer demand is rising, and the economy appears to be mending.

Home prices are expected to rise in 2012 and, as they do, they'll take housing payments with them. The best time to buy a home may be now; before the recovery completes.

Bank Repossessions Drop To A 44-Month Low

Foreclosure activity continues to concentrate over just a few states.

According to foreclosure-tracker RealtyTrac, November's foreclosure filings fell 3 percent as compared to October, and 14 percent from November 2010.

"Foreclosure filing" is a catch-all term for the various "action steps" throughout the foreclosure process. The grouping comprises default notices, scheduled home auctions, and bank repossessions.

As in most months, though, foreclosure activity remains concentrated by state. More than half of last month's bank repossessions can be traced to just 6 states.

1. California : 14.8% of all bank repossessions
2. Florida : 12.7% of all bank repossessions
3. Texas : 7.0% of all bank repossessions
4. Georgia : 6.9% of all bank repossessions
5. Arizona : 6.7% of all bank repossessions
6. Michigan : 6.3% of all bank repossessions

Meanwhile, with just 5 repossessions, South Dakota topped the list of states with the fewest bank repossessions in November. The Mount Rushmore State accounted for just 0.009% of REO nationwide in a month in which bank repossessions dropped to a 44-month low point across the United States.

The drop in REO is coming at a tough time for today's San Jose home buyers. Distressed properties are in high demand -- mostly because they sell at steep discounts.

According to the National Association of REALTORS®, distressed homes accounted for 28 percent of all home sales in October. As fewer bank-owned homes become available, though, there will be fewer "deals" to be had.

Especially as the broader housing market continues to signal its recovery.

If you plan to buy a bank-owned foreclosed property, do your research first. As supplies drop, the price for foreclosed homes throughout California relative to non-distressed homes may rise, rendering REO properties less of a relative "value".

Before you write a contract, therefore, talk with a licensed real estate agent. There's plenty of foreclosure data available online but, when it's time to buy, you should have an experienced agent on your side.

A Simple Explanation Of The Federal Reserve Statement (December 13, 2011 Edition)

Tuesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was nearly unanimous for the second straight month. Just one FOMC member dissented in the vote, favoring additional policy stimulus beyond what the Federal Reserve currently provides.

In its press release, the Federal Reserve sais that the the U.S. economy is improving, noting that since its November 2011 meeting, the economy has been "expanding moderately". The Fed also added that domestic growth is occurring despite some "apparent slowing in global growth" -- a nod to ongoing uncertainty within the Eurozone.

The Federal Reserve expects a moderate pace of growth over the next few quarters, and believes that the jobs market will continue to improve, but slowly.

Other potential soft spots within the economy include :  

1. A slowdown in business investment
2. A "depressed" housing market
3. Strains in global financial markets

The Federal Reserve added no new policies at its December meeting, and made no changes to existing ones. It re-iterated its plan to leave the Fed Funds Rate within its current range of 0.000-0.250 percent "at least until mid-2013" and re-affirmed "Operation Twist" -- the stimulus program through which the Fed sells Treasury securities with a maturity of 3 years or less, and uses the proceeds to buy mortgage bonds with maturity between 6 and 30 years.

Mortgage bonds are mostly unchanged since the Fed's announcement, giving mortgage rates in San Jose little reason to rise or fall.

Mortgage rates remain near all-time lows and, for homeowners willing to pay points + closing costs, 30-year fixed rate mortgages can be locked at less than 4 percent. If you're thinking of buying or refinancing a home, it's a good time to lock a mortgage rate.

The FOMC's next meeting will be its first scheduled meeting of the new year. The meeting is slated for January 24-25, 2012.

America's Best Places To Raise A Family, Listed By State

BusinessWeek recently released its 2011 America's Best Place to Raise a Family rankings. College-town Blacksburg, Virginia took top honors, breaking a 2-year win streak for the Chicago, Illinois region.

In 2009, suburban Mount Prospect, Illinois placed first. Last year, it was Tinley Park, Illinois.

The BusinessWeek report employs data from real estate information firm Onboard Informatics to make its rankings, compiling data across categories such as education, crime, and jobs plus access to parks and affordable homes. All selections are limited by population; all selections are home to 50,000 residents or fewer. Median incomes are within 20 percent -- plus or minus -- of the state's median income levels.

BusinessWeek names one winner in each state. The winners in the 10 most populous states and their nearest "big city" are listed below

1. California : East San Gabriel (Los Angeles)
2. Texas : Wells Branch (Austin)
3. New York : Hampton Manor (Albany)
4. Florida : Niceville (Fort Walton Beach)
5. Illinois : Morton Grove (Chicago)
6. Pennsylvania : Cecil-Bishop (Pittsburgh)
7. Ohio : St. Henry (Dayton)
8. Michigan : Spring Arbor (Jackson)
9. Georgia : Hoschton (Atlanta)
10. North Carolina : Tryon (Spartanburg, SC)

The winners in all 50 states can be found on the BusinessWeek website.

Rankings like the BusinessWeek America's Best Place to Raise a Family can be useful for home buyers in Santa Clara , but like everything in real estate, statistics do not apply to every home equally. Even within the "best towns", there are areas in which school systems are better, crime figures are lower, and amenities are more plentiful.

Therefore, before you make the decision to buy a home, talk with a real estate agent who has local market knowledge. It's the most effective means to get data that matters to you.

How To Clean A Cutting Board

Germ studies show that a kitchen cutting board carries up to 200 times more bacteria than a toilet seat.

This is because homeowners clean their bathrooms with fervor, while only "rinsing" down parts of their kitchens.

In failing to disinfect cutting boards (among other kitchen mainstays), homeowners in San Jose and everywhere else leave untouched a prime bacteria breeding ground, and may be getting sick as a result.

According to the CDC, 48 million Americans get sick from food-borne bacteria each year. 

If it's been a while since you've cleaned your kitchen cutting board, here are some tips on how to do it properly.

Homeowners with plastic cutting boards will have an easier go that homeowners with wooden cutting boards. If your cutting board is plastic, just place it in the dishwasher with dishwasher detergent. If your dishwasher has a "sanitize" feature, be sure to select it.

If your cutting board is made of wood, or another material that may crack and/or splinter in a dishwasher, follow these steps instead :

1. Prepare a solution of natural dish soap and hot water.
2. Without submerging the cutting board, scrub it with the solution.
3. Towel dry the board and allow it to air-dry until completely dry.
4. Apply a thin layer of undistilled white vinegar to the board surface either by spray can or paper towel.
5. Allow the vinegar to sit for 30 minutes, then wipe clean.

For preventative care, you should also consider using separate cutting boards for meats and for fruits and vegetables. This can prevent cross-contamination. In addition, purchase a food-grade mineral oil and apply it to your wooden cutting boards regularly.

The kitchen is among the "germiest" places in your home. With extra attention, though, you can help keep it as bacteria-free as possible 

Reduce Long-Term Loan Costs With A 15-Year Fixed Rate Mortgage

For as low as 30-year fixed rate mortgage rates are in California today, 15-year fixed rate mortgage rates are even lower.

According to Freddie Mac's weekly mortgage rate survey, the average 15-year fixed rate mortgage rate is now 3.27% nationwide with an accompanying 0.8 discount points. 1 discount point is a closing cost equal to 1 percent of your loan size.

The current 15-year fixed rate reading is just one tick above the all-time, 15-year fixed rate mortgage low of 3.26% set in October 2011.

If you've ever thought of "going 15", it's a terrific time to talk to your lender.

The primary benefit of using a 15-year fixed rate mortgage as opposed to a 30-year fixed rate one is that a 15-year fixed rate mortgage dramatically cuts the long-term interest costs of your loan. The downside is that monthly payments are relatively large.

At today's mortgage rates, per $100,000 borrowed :

• 15-year fixed rate mortgage : $704 principal + interest monthly
• 30-year fixed rate mortgage : $477 principal + interest monthly

So, for homeowners opting for a 15-year fixed rate mortgage, the monthly principal + interest payments will be 48% higher as compared to a 30-year fixed rate mortgage of the same loan size. Long-term, however, because the 15-year fixed rate mortgage interest rate is lower and because it pays off in half the time of a 30-year loan, a homeowner will save $45,000 in interest costs per $100,000 borrowed.

$45,000 per $100,000 borrowed is a huge amount of savings. It's monies that can be used for college tuition, home improvement projects, retirement savings, or anything else. 

That said, the 15-year fixed rate mortgage is not ideal for everyone.

Because it requires higher monthly payments, a 15-year fixed rate mortgage may add stress to your household budget. Furthermore, once you commit to a 15-year loan term with your lender, you can't revert back to a 30-year loan term without a refinance and refinances can be costly.

Therefore, be sure of yourself when selecting a 15-year fixed rate loan. The rewards are great, but the risks can be, too.

Reduce Long-Term Loan Costs With A 15-Year Fixed Rate Mortgage

For as low as 30-year fixed rate mortgage rates are in California today, 15-year fixed rate mortgage rates are even lower.

According to Freddie Mac's weekly mortgage rate survey, the average 15-year fixed rate mortgage rate is now 3.27% nationwide with an accompanying 0.8 discount points. 1 discount point is a closing cost equal to 1 percent of your loan size.

The current 15-year fixed rate reading is just one tick above the all-time, 15-year fixed rate mortgage low of 3.26% set in October 2011.

If you've ever thought of "going 15", it's a terrific time to talk to your lender.

The primary benefit of using a 15-year fixed rate mortgage as opposed to a 30-year fixed rate one is that a 15-year fixed rate mortgage dramatically cuts the long-term interest costs of your loan. The downside is that monthly payments are relatively large.

At today's mortgage rates, per $100,000 borrowed :

• 15-year fixed rate mortgage : $704 principal + interest monthly
• 30-year fixed rate mortgage : $477 principal + interest monthly

So, for homeowners opting for a 15-year fixed rate mortgage, the monthly principal + interest payments will be 48% higher as compared to a 30-year fixed rate mortgage of the same loan size. Long-term, however, because the 15-year fixed rate mortgage interest rate is lower and because it pays off in half the time of a 30-year loan, a homeowner will save $45,000 in interest costs per $100,000 borrowed.

$45,000 per $100,000 borrowed is a huge amount of savings. It's monies that can be used for college tuition, home improvement projects, retirement savings, or anything else. 

That said, the 15-year fixed rate mortgage is not ideal for everyone.

Because it requires higher monthly payments, a 15-year fixed rate mortgage may add stress to your household budget. Furthermore, once you commit to a 15-year loan term with your lender, you can't revert back to a 30-year loan term without a refinance and refinances can be costly.

Therefore, be sure of yourself when selecting a 15-year fixed rate loan. The rewards are great, but the risks can be, too.

Simple Real Estate Definitions : Tax And Insurance Escrow

As a homeowner in Santa Clara , your fiscal responsibility extends beyond just making mortgage payments. You must also pay your home's real estate taxes as they come due, as well as your homeowners insurance policy premiums.

Failure to pay real estate taxes can result in foreclosure. Failure to insure your home is a breach of your mortgage loan terms.

There are two methods by which you can pay your real estate tax and homeowners insurance bills.

The first method is to pay your taxes and insurance as the bills come due, usually semi-annually. Depending on your home's tax bill size and the cost to insure your home, these payments can feel quite large -- especially if you've failed to budget for them properly.

The second method of paying your taxes and insurance is to give your lender the right to pay them on your behalf, a process known as "escrowing for taxes and insurance".

When you escrow your real estate taxes and homeowners insurance, you pay a portion of your annual obligation to your lender each month, which your lender then holds in a special account for you, and disperses to your taxing entities and insurance company as needed. Lenders prefer that homeowners escrow taxes and insurance because, in doing so, the lender is assured that tax bills remain current and that homes stay insured.

Want a discount on your next mortgage rate? Tell your lender that you're willing to escrow.

To help calculate your monthly escrow payment to your lender, do the following :

1. Find your home's annual real estate tax bill
2. Find your home's annual homeowners insurance premium
3. Add the two figures and divide by 12 months in a year

The quotient is your monthly "escrow"; the extra payment you'll make to your lender each month along with your regularly scheduled principal + interest payment. Then, when your tax bills and insurance premiums come due, your lender will make sure the payments are made on your behalf.

If you're unsure whether escrowing is right for you, talk to your loan officer and/or financial planner. There are valid reasons to choose either path.

The Most Expensive ZIP Codes In The Country (2011 Edition)

In the housing market, amenities and location have as much to do with a home's value as the everyday forces of supply-and-demand. Whereas the latter causes home values to rise and fall over time, the former creates a starting point for said values. 

Where you live -- and the features of your home -- determine your home's price range. Naturally, homes in some areas are consistently higher-valued than homes in others.

Using data compiled by real estate market data firm Altos Research, Forbes Magazine presents America's 10 most expensive ZIP codes. California and the New York Metro area dominate the list.

1. Alpine, NJ (07620) : $4,550,000
2. Atherton, CA (94027) : $4,295,000
3. Sagaponack, NY (11962) : $3.595,000
4. Hillsborough, CA (94010) : $3,499,000
5. Beverly Hills, CA (90210) : $3,469,891
6. New York, NY (10012) : $3,392,574
7. New York, NY (10013) : $3,317,962
8. Water Mill, NY (11976) : $3,300,000
9. Montecito, CA (93108) : $3,099,348
10. Old Westbury, NY (11568) : $3,095,000

In fact, of the top 50 most expensive ZIP codes, only 6 are located outside of California and New York regions. 3 are Colorado resort towns -- Snowmass (81654), Aspen (81611) and Telluride (81435) -- one is in Maryland, one is in Florida, and the last is in Washington State.

Chicago-suburb Kenilworth (60043) is the top-ranked Midwest ZIP code. It placed 86th overall.

The Forbes list may be interesting but, to home buyers or sellers in San Jose , it should not be the final word in home values. Real estate is a local market which means that -- even within a given ZIP code -- prices can vary based on street and neighborhood.

Look past general data and get specific. Talk to your real estate agent for local market pricing.

A Simple Explanation Of The Federal Reserve Statement (November 2, 2011 Edition)

Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was nearly unanimous, with just one dissenting voter. There were 3 dissenters at each of the FOMC's last two meetings.

In its press release, the Federal Reserve presented an improved outlook for the U.S. economy, noting that since its last meeting in September, there's new evidence that the economy "strengthened somewhat" in the third quarter.

One example cited is that consumer and business spending continues to rise while inflationary pressures on the economy remain modest. This indicates controlled growth -- a plus in a recovering economy.   

The economy remains slowed by a number of factors, though, as noted by the Fed :

1. "Continuing weakness" in the labor market
2. Softness in commercial real estate
3. A "depressed" housing market

In response to mixed economic conditions, the FOMC opted to "do nothing" today; it introduced no new monetary policy, and revised none of its existing market stimulus. The Fed re-iterated its plan to leave the Fed Funds Rate in its current range near 0.000 percent "at least until mid-2013″ and affirmed "Operation Twist" -- the program in which the Fed sells Treasury securities with a maturity of 3 years or less, and uses the proceeds to buy mortgage bonds with maturity between 6 and 30 years.

Mortgage market reaction to the FOMC statement has been negative this afternoon. Mortgage rates throughout California are rising because analysts expected the Fed to launch new, bigger stimulus plans. It didn't. Rates may drift higher for the new few days, too.

Therefore, it today's mortgage rates fit your household budget, consider locking in a mortgage rate. Mortgage rates are very low right now, relative to history. It may not last.

The FOMC's next meeting -- its last scheduled meeting of the year -- is December 13, 2011.

More Risk To Home Affordability : Friday's Jobs Report

Within the next 48 hours, mortgage rates may get bouncy. The Federal Open Market Committee will adjourn from a 2-day meeting and October's Non-Farm Payrolls report is due for release.

Of the two market movers, it's the Non-Farm Payrolls report that may cause the most damage. Rate shoppers across California would do well to pay attention.

Published monthly, the "jobs report" provides sector-by-sector employment data from the month prior. It's a product of the Bureau of Labor Statistics and includes the national Unemployment Rate.

In September, the economy added 103,000 jobs, and job creation from the two months prior was shown to be higher by 99,000 jobs higher than originally reported. This was a huge improvement over the initial August release which showed zero new jobs created.

When September's jobs report was released, mortgage rates spiked. This is because of the correlation between jobs and the U.S. economy. There are a lot of economic "positives" when the U.S. workforce is growing.

1. Consumer spending increases
2. Governments start more projects
3. Businesses make more investment

Each of these items leads to additional hiring, and the cycle continues.

Wall Street expects that 90,000 jobs were created in October 2011. If the actual number of jobs created exceeds this estimate, it will be considered a positive for the economy, and mortgage rates should climb as Wall Street dumps mortgage-backed bonds in favor of equities.

Conversely, if the number of new jobs falls short of 90,000, it will be considered a disappointment, and mortgage rates should rise.

There is a lot of risk in floating a mortgage rate today. The Federal Reserve could make a statement that drives rates higher, and Friday's job report could do the same. If you're under contract for a home or planning to refinance, eliminate your interest rate risk.

Lock your mortgage rate today.

Make Your Mortgage Rate Strategy : The Federal Reserve Starts A 2-Day Meeting

The Federal Open Market Committee begins a scheduled, 2-day meeting today, the seventh of its 8 scheduled meetings this year, and the eighth Fed meeting overall.

The FOMC is a 12-person sub-committee within the Federal Reserve. It's the group responsible for setting the nation's monetary policy and is led by Federal Reserve Chairman Ben Bernanke.

The FOMC's most well-known role is as the steward of the Fed Funds Rate. This is the overnight rate at which U.S. banks borrow money from each other. The Fed Funds Rate is a unique, "banking" interest rate, and should not be confused with consumer interest rates, a category which includes "mortgage rates".

Mortgage rates are not set by the Federal Reserve. 

Rather, mortgage rates are based on the price of mortgage-backed bonds. If mortgage rates correlated to the FOMC's Fed Funds Rate, the chart at right would be linear.

That said, the FOMC does exert influence on mortgage markets.

After its FOMC meetings, the Federal Reserve issues a press release to the public. In it, the central banker summarizes economic conditions nationwide, highlighting threats to the economy and areas of strength.

When the Federal Reserve's statement is generally "positive", mortgage rates tend to rise. This is because a strengthening economy invites investors to assume more risk, spurring equity markets at the expense of all bonds types, including the mortgage-backed kind.

When bond markets lose, mortgage rates rise.

Conversely, when the Fed is generally negative, bond markets gain, pushing mortgage rates lower throughout California.

The Fed can also influence mortgage rates via new policy.

At its last meeting, the FOMC launched a new, $400-billion round of mortgage-market stimulus known as Operation Twist. The added mortgage-bond support led mortgage rates lower post-FOMC meeting. 

The Fed may expand Operation Twist as soon as Wednesday afternoon. It may also take no such steps at all. Unfortunately, there are few clues about what the Federal Reserve may do next, if anything at all. As a result, mortgage rates will be a moving target for the next 36 hours. First, they'll be volatile before of the Fed's statement. Then, they'll be volatile after the Fed's statement.

Even if the Fed does nothing, mortgage rates will change so your safest play is to lock a mortgage rate ahead of Wednesday's 2:15 PM ET adjournment.

There too much risk in floating.

Lower Your Fall/Winter Energy Bill With Ceiling Fans

November is here with many parts of the country are already feeling the chill. This weekend, a nor'easter dropped up to 20 inches of snow in cities along the eastern seaboard  -- a reminder that winter is coming.

No matter where you live, though, the seasonal change in temperature throughout San Jose serves as an excellent reminder to reset the blades on your home's ceiling fans.

Ceiling fans don't warm or cool air, specifically. Instead, they circulate air which can have the effect of making a room feel warmer in the winter months, and cooler in the summer months.

When it's cold outside, ceiling fans push warm air down from the ceiling, balancing the heat within a room. This can make a room feel 4-6 degrees warmer. Then, during warmer months, ceiling fans push a room's cold air back into circulation, which creates a windchill effect, of sorts.

This, too, can change a room's temperate 4-6 degrees.

The secret to a ceiling fan is in the rotation direction of its blades. 

• When fan blades rotate clockwise, the fan makes a room feel warmed
• When fan blades rotate counter-clockwise, the fan make a room feel cooler.

This Weather Channel video explains how it works.

If your home is without ceiling fans, consider installing one (or more). Ceiling fans are economical and "green", using the equivalent energy of a 100-watt light bulb, while lowering your home's energy costs.

Plus, they're relatively simple to install. 

Tutorial videos are available online for the do-it-yourselfers, or just call a qualified electrician for assistance.

Installing a ceiling fan is a 1-hour project.

Pending Home Sales Index Slips For 4th Straight Month

Nationwide, fewer homes are going under contract to sell.

According to the National Association of REALTORS®, the Pending Home Sales Index fell 5 percent last month. September marks the fourth consecutive month in which the index has dropped. 

The Pending Home Sales Index is a monthly index which measures the number of homes under contract to sell, but not yet closed. As such, it's among the few "forward-looking" housing indicators; a data set meant to predict future home sales. 

80% of homes under contract close within 2 months so, if the September Pending Home Sales Index is to be believed, we should expect home sales to decline through October and November. 

And that's before we account for cancelled contracts.

Also from the National Association of REALTORS®, we learn that 18 percent of homes under contract failed to close in September. This is double the failure rate from September 2010 and it, too, should drag Existing Home Sales volume lower this fall.

On a seasonally-adjusted, regional basis, the Pending Home Sales Index fell everywhere. 

• Northeast Region: -4.7% from August
• Midwest Region : -6.2% from August
• South Region : -5.5% from August
• West Region : -2.1% from August

For home buyers and sellers in San Jose , though, regional data remains too broad to be useful. Housing markets are local, meaning that each block on each street on each city has its own distinct economy. When 9 states are grouped into a single "region", it's neither helpful nor relevant to people making buy/sell decisions.

That said, the Pending Home Sales Index remains important because it's about housing, and housing is a keystone of the U.S. economic recovery.

The market looks ideal for buyers. Home prices are rising, but slowly; and mortgage rates remain near rock-bottom levels. Home affordability is high and should remain that way for the next few weeks.

If you're shopping for a home, it's an excellent time to go under contract.

New Home Inventory Keeps Sinking

Home builders continue to sell homes and work through inventory.

According to data from the Census Bureau, the number of new homes sold in September jumped 6 percent from the month prior, beating analyst expectations. On a seasonally-adjusted, annualized basis, buyers in California and nationwide closed on 313,000 newly-built homes last month.

It's the highest reading since April and a major reason why the available number of new homes for sale is shrinking. 

As compared to September 2010, there are 19% fewer homes for sale nationwide. At today's sales pace, the complete new home inventory would be "sold out" in 6.2 months – the quickest sell-out pace since the April 2010 federal home buyer tax credit expiration.

It's no wonder builder confidence is rising.

After averaging 15 through the first 9 months of the year, homebuilder confidence jumped 4 points for October, carried by low mortgage rates and the expectation for a strong winter/spring selling season.

For buyers in Santa Clara , this could be construed as a housing market-shifting signal. As builder confidence rises, it becomes more difficult to negotiate for upgrades and price reductions on a new home. "Great deals" get scarce.

Furthermore, it's unlikely that mortgage rates will sustain their current, ultra-low levels into 2012. Rising rates lead to higher housing payments on a month-to-month basis. 

If you're in the market for a newly-built home, in other words, today's homes may represent your best value of the year.

The Government's Revamped HARP Program For Underwater Homeowners

The Federal Home Finance Agency announced big changes to its Home Affordable Refinance Program Monday. More commonly called HARP, the Home Affordable Refinance Program is meant to give "underwater homeowners" opportunity to refinance.

With average, 30-year fixed rate mortgages still hovering near 4.000 percent, there are more than a million homeowners in San Jose and nationwide who stand to benefit from the program overhaul.

To qualify for the re-released HARP program, you must meet 4 basic criteria :

1. Your existing home loan must be guaranteed by Fannie Mae or Freddie Mac
2. Your home must be a 1- to 4-unit property
3. You must have a perfect mortgage payment history going back 6 months
4. You may not have had more than one 30-day late payment on your mortgage going back 12 months 

Most notable about the new HARP refinance program, though, is that the government is waiving loan-to-value requirements on a HARP loans. Homeowners' participation in the program  are no longer restricted by their home's appraised value. In fact, the new HARP doesn't even require an appraisal, in most instances.

With the new HARP program, underwater mortgages can be refinanced without LTV limit or penalty.

According to the government's press release, pricing considerations for the new HARP program will be released on or before November 15, 2011; and lenders are expected to be offering the program as of December 1, 2011.

If you think you may be eligible, first confirm that either Fannie Mae or Freddie Mac is backing your loan. Both groups provide a simple, online lookup.

• Fannie Mae loan lookup : http://www.fanniemae.com/loanlookup/
• Freddie Mac loan lookup : https://ww3.freddiemac.com/corporate/

If your loan cannot be located on either of these two sites, your current mortgage is not backed by Fannie Mae or Freddie Mac, and is not HARP-eligible.

The FHFA's official press release contains an FAQ section. In it, you'll find minimum qualification standards, as well as information related to condominiums and to mortgage insurance.

The HARP program is meant to help a wide group of homeowners, but each applicant's situation is unique. For specific HARP questions, be sure to talk with a loan officer. 

How To Change Your Doorbell

When we move into a home, we make changes. Appliances get replaced, rooms get painted, and floors get refinished or recarpeted. It part of how we make a home "ours".

One item we tend to skip, though, is the changing of the doorbell. In most San Jose homes, the existing doorbell is "good enough". 

Well, if you've ever had a mind to change your home's hard-wired doorbell system, the good news is that changing your doorbell is a simple, do-it-yourself project. Whether you want chimes, songs, or the traditional ding-dong, all you need is a screwdriver, some tape, and the new doorbell system.

This 2-minute video from Lowe's maps it out :

1. Cut the power to your doorbell from your circuit breaker
2. Unscrew the doorbell face plate
3. Replace the face plate with your new doorbell
4. Locate your in-home receiver and remove the chime system
5. Replace the chime system with your new system

The video also includes helpful tips such as how to use tape to prevent "losing" wires in your walls, and how to label your wires for faster re-wiring.

Changing a doorbell is a quick, 1-hour project. Use the video's guidance to make you don't miss a step.

Despite 18% Contract Failure Rate, Home Resales Stay Strong

Despite fewer homes for sale nationwide, the number of home resales remains steady.

According to data from the National Association of REALTORS®, on a seasonally-adjusted, annualized basis, September's Existing Home Sales eased by 150,000 units, falling to 4.91 million units nationwide.

An "existing home" is a home that's been previously occupied and, despite last month's drop, September's sales volume remains the second-highest on record since April 2011.

This statistic is noteworthy for two reasons :

1. There are 9.9% fewer homes available for sale as compared to 12 months ago
2. Contract "failures" are twice as high as compared to September 2010, now averaging 18 percent nationwide

A contract failure is typically the result of homes not appraising for the purchase price; mortgage denials in the underwriting process; and, insurmountable home inspection issues.

Because sales volume is steady, we can infer that more buyers are "in the market" than the final sales tallies would have us believe. This notion is also evident in the Existing Home Supply data.

In September, the number of homes for sale fell by 69,000 nationwide. At the current pace of sales, it would take 8.5 months to "sell out" the complete national inventory. This is more than 2 months faster as compared to September 2010 -- a major improvement for the housing market and a sign that home prices should rise soon.

Today's Santa Clara market exemplifies Supply and Demand. Demand for homes is holding steady as home inventories fall. This creates pressure for home buyers to make offers, and multiple bidding situations become more common. Negotiation leverage shifts to the sellers and the result is that buyers pay higher prices for homes.

Thankfully, mortgage rates remain low. 

Freddie Mac reports that the 30-year fixed rate mortgage ticked lower this week, averaging 4.11% nationwide with 0.8 discount points. This means that mortgage payments are lower by $46 per $100,000 borrowed as compared to the high-point of the year.

You may pay more for a new home, in other words, but you'll pay a lot less to finance it.

Finding Truth In September's Housing Starts Report

Headlines in newspapers can be misleading -- especially with respect to housing figures. Media coverage of the most recent Housing Starts data serves as an excellent illustration.

Wednesday, the Census Bureau released its September Housing Starts report. In it, the government said that national Housing Starts rose 15 percent in September as compared to August 2011, tallying 658,000 units on a seasonally-adjusted annualized basis.

The September reading is the highest monthly reading since April 2010, the last month of last year's home buyer tax credit.

The sudden surge in starts is big news for a housing market that has struggled of late, and the press was eager to carry the story. Here is a sampling of some headlines:

• U.S. Housing Starts Rise 15%, Hit 17-Month High (MarketWatch)
• Home Building Jumps 15% in September (ABC)
• New Construction Surges In September (LA Times)

These headlines are each accurate. However, they're also misleading.

Yes, Housing Starts did surge in September, but if we remove the "5 or more units" grouping from the Census Bureau data -- the catgory that includes apartment buildings and condominium structures -- we're left with Single-Family Housing Starts and Single-Family Housing Starts rose just 1.7 percent last month.

That's a good number, but hardly a great one. And for home buyers and sellers throughout San Jose and nationwide, it's the Single-Family Housing Starts that matter most. Individuals like you and I don't buy entire apartment buildings. Most often, we buy single-family homes. Therefore, that's the data for which we should watch.

The good news is that media tales work in both directions.

Building Permits dropped 5 percent last month when the volatile 5-unit-or-more-units category was included from the math. Isolating for single-family homes, we find that permits were unchanged.

This is good housing because 82% of homes begin construction within 60 days of permit-issuance, hinting at a steady, late-fall housing market.

Homebuilder Confidence Rises on Surging Sales Volume, Foot Traffic

Homebuilder confidence is rebounding sharply.

Just one month after falling to a multi-month low, the Housing Market Index rebounded four points to 18 for October. It's the highest reading for the HMI since May 2010 -- the month after last year's homebuyer tax credit expiration.

The Housing Market Index is published monthly by the National Association of Homebuilders and is scored on a scale of 1-100. Readings above 50 indicate favorable conditions for homebuilders. Readings below 50 indicate unfavorable conditions.

The index has been below 50 since May 2006 -- a 66-month streak.

The Housing Market Index is a composite reading; the result of three separate surveys sent to home builders each month. Builders are asked about current single-family home sales volume; projected single-family home sales volume over the next 6 months; and current "foot traffic".

In October, builder responses were stronger in all 3 categories :

• Current single-family sales : 18 (+4 from September)
• Projected single-family sales : 24 (+7 from September)
• Buyer foot traffic : 14 (+3 from September)

Meanwhile, of particular interest to today's San Jose home buyers is that builders expect volume to surge over the next two seasons. And, with current sales volume rising and foot traffic strengthening, the fall and winter months could be strong ones in the new homes market.

In addition, the builder trade group press release states that rising costs for materials are squeezing building profit margins.

For buyers, it all adds up higher home prices ahead. As builders grow more confident about the housing market, they're less likely to make concessions on pricing or upgrades. Rising building costs fortify that argument. The "great deal" will be tougher to negotiate. 

At least mortgage rates are low.

Low mortgage rates are keeping homes affordable in California and nationwide. If you're looking for the right time to buy new construction, therefore, this month may be it.

Foreclosure Rate Drops For The 12th Straight Month

Foreclosure activity continues to slow throughout the United States.

According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings dipped below 215,000 in September 2011, a 6 percent decrease from August.

A "foreclosure filing" is defined as any foreclosure-related action including Notice of Default, Scheduled Auction, or Bank Repossession.

September marks the 12th straight month in which foreclosure filings fell year-over-year.

There are several reasons why foreclosure filings are down, including an increase in the amount of time it takes banks to move a foreclosure through its pipeline. It now takes a nationwide average of 336 days from the date of initial default notice to bank repossession.

Some states work quicker than others, however, because of a combination of state law and personnel.

Homes in New York take an average of 986 days to foreclose, for example, the longest in the country. Homes in Texas foreclose the quickest, registering just 86 days.

As in prior months, bank repossessions remain concentrated by state. Just 6 states accounted for half of the country's REO last month:

• California : 16.6 percent
• Georgia : 8.5 percent
• Florida : 8.3 percent
• Texas : 6.2 percent
• Michigan : 6.1 percent
• Illinois : 5.2 percent

Collectively, these 6 states represent just 36 percent of the nation's population.

By contrast, the bottom 6 states were home to just 192 repossessions last month -- 0.3% of the national total. Those 6 states were Alaska, Wyoming, District of Columbia, North Dakota, South Dakota, and Vermont.

For home buyers in San Jose , shopping for foreclosed properties can be an excellent way to get "a deal". Foreclosed homes typically sell at discounts as compared to "non-foreclosed" homes, but are often sold "as-is". This means that homes listed for sale may be defective or out-of-code.

Before placing a bid on a foreclosed home, make sure that you're represented by an experienced real estate professional. 

Save Money By Preventing Water Heat Loss In Your Home

How much energy is your home wasting on water?

According to the U.S. Department of Energy, water heating can account for 25% of a home's energy use. This is a substantial percentage, representing thousands of dollars per year in energy costs.

The good news is there are multiple ways to increase your home's energy-efficiency with respect to heated water.

The Department of Energy provides a list. 

1. Reduce hot water usage : Fix leaks, install low-flow fixtures, and use high-efficiency clothes washers and dishwashers.
2. Lower the hot water temperature : 120ºF is ideal. Each 10ºF drop in temperature saves up to 5% and slows corrosion.
3. Insulate your water heater : A simple blanket wrap costs $25 and will save you up to 9% in costs
4. Insulate your water pipes : Water will be delivered 4ºF hotter which means lower energy use.
5. Install a timer : If your heater is electric, turn it off during non-peak hours such as overnight
6. Use greywater heat recovery systems : 90% of water's energy is typically lost down the drain.

Some of the above items are costly to implement, and others are inexpensive. Most can be handled without hiring a plumber, especially those items at the top of the list.

As a Santa Clara homeowner, take control. Apply these energy-saving, water-heating strategies and you'll not only save money each month, but you'll lengthen the useful life of your home's appliances and plumbing.

If you're in need a plumber referral, please ask.

Fed Minutes : A Fed Divided Reaches Comprise

Wednesday, the Federal Reserve released the minutes from its 2-day meeting September 20-21, 2011.

The release shows a divided Fed in disagreement about the current U.S. monetary policy. The group reached compromise for new economic stimulus, however, and maintained its commitment to accommodative interest rates.

Wall Street reacted tepidly to the minutes. Mortgage rates in Santa Clara worsened slightly post-release.

The Fed Minutes gets less press than the FOMC's post-meeting press release, but it's every bit as important. Because it details the conversations that take place among voting and non-voting Fed members at FOMC meetings, the Fed Minutes is an inside-look at the debates and discussion that lead to new monetary policy.

As examples, here are some of the topics covered at the September FOMC meeting :

• On growth : Economic growth was slow, but "did not suggest a contraction"
• On housing : The market continues to be "depressed by weak demand"
• On rates : The Fed Funds Rate will remain low until mid-2013

Then, with Fed members divided on whether the central bank should add new stimulus, it reached a compromise instead, launching the $400 billion "Operation Twist" program. Operation Twist is meant to lower longer-term interest rates, including mortgage rates.

Since Operation Twist began, mortgage rates are higher by nearly 0.375%.

Also noteworthy within the Fed Minutes was concern for an economic slowdown and how the Federal Reserve may react. According to the record, a slowdown may prompt the Fed to introduce its third round of qualitative easing, or QE3. An out-sized stimulus plan would likely lead rates higher.

Nothing will happen until the Fed's next meeting, however. Chairman Ben Bernanke & Co meet next November 1-2 for a 2-day meeting..

Retail Sales Expected To Rise; Mortgage Rates Should Rise, Too

The American Consumer is alive and well, it seems.

Friday morning, the Census Bureau will release its Retail Sales figures for September. The report is expected to show an increase in gross receipts for the 15th straight month with analysts predicting a 0.6 percent increase from August.

The projected increase represents the largest jump in Retail Sales in six months and would likely lead mortgage rates higher for buyers in Santa Clara and   nationwide.

The connection between Retail Sales and mortgage rates is fairly straight-forward. Retail Sales are the majority component of "consumer spending" and consumer spending represents the majority of the U.S. economy -- up to 70 percent, by some estimates.

And, as the economy goes, so go mortgage rates.

10 months ago, mortgage rates shot forward to start the year. This is because expectations were high for a strong economic rebound. Conforming and FHA rates crossed 5 percent at the time and were headed toward six.

By mid-April, though, it was clear that economic data was falling short of predictions. As a result, mortgage rates declined, kicking off the 2011 Refi Boom. Then, by August, on ongoing economic softness, mortgage rates in California fell further, making new all-time lows.

Expectations for a recovery have returned. Rates are now rising.

Last week's strong jobs report sparked hope for the U.S. economy and investors have been voting with their dollars. Mortgage rates are now up 7 consecutive days and Friday's Retail Sales report could cement the trend.

If you're shopping mortgage rates today, there's risk in "floating". You may want to lock your rate before Friday's Retail Sales report drives rates even higher.

The Retail Sales report will be released at 8:30 AM ET.

Quiz : What's The First Thing You Should Do After A Home Purchase?

Did you remember to handle the most basic safety precaution for your new home?

When people buy homes -- in Santa Clara or wherever --  , there's a tendency to think "Big Picture" on home improvements. Flooring, painting and furniture are common "just-moved-in" purchases, as are cable television and utilities packages.

The most important move-in purchase, though, may also be the least expensive -- deadbolts for your doors.

Every home has at least one -- and sometimes up to dozen -- keyed points of entry. And until you change those locks, there's no telling just how many people may have access to your home.

For example, your home's prior owners may have shared house keys with any/all of the following people :

• Real estate agents
• Neighbors and friends
• Parents, brothers and sisters
• Home cleaning service
• Dog walkers and pet sitters

Those keys will still gain entry into your home until you change the locks. This is why your first act homeowner should be to replace all your home's keyed entries with new locks and/or deadbolts.

Locks and deadbolts come in a variety of designs and finises, with varying price points. A basic single-cylinder, keyed deadbolt costs less than $15, and a powerful digital-entry, keyless system sells for $200-plus. There are a bevy of models at prices in between, too.

Regardless of which lock system you choose, don't procrastinate on installation. Ideally, your locks should be changed on the same day of purchase, as close to closing's completion as possible.

Hardware stores carry most deadbolt varieties and many can be installed with just a screwdriver. For complicated installations, talk to a locksmith.

Should I Refinance My Home?

With mortgage rates at all-time lows, you may be asking "Is now a good time to refinance?". This short interview from NBC's The Today Show offers good insight.

Refinancing a mortgage is about more than just "low rates". For example, there are costs associated with giving a new mortgage and even with the average, 30-year fixed rate mortgage near 4 percent, the costs of a such a move can outweigh the benefits -- both in the short- and long-term.

The video originally ran in September when mortgage rates averaged 4.09%. Rates are different today, but the offered advice remains relevant.

Some of the key points raised include :

• The lowest rates come with the highest costs. Consider a slightly higher-rate option from your bank.
• Falling home values may make it harder to qualify for a refinance in the future. Your best time to act may be now.
• If you're many years into a 30-year loan, you can consider switching to a 15-year mortgage to avoid "resetting" your term.

And, lastly, the interviewee makes a strong point that your refinance should save you enough money to make paying the closing costs "worth it". Make sure the break-even point on your closing costs versus your monthly savings occurs within a reasonable time frame.

At 4 minutes, the The Today Show video is short, but dense with quality information. For follow-up on whether a refinance makes sense for your situation, be sure to talk with your loan officer.

Freddie Mac : Mortgage Rates Sub-4 Percent

Mortgage rates have dropped past 4 percent.

For the first time in more than 40 years, data from Freddie Mac's weekly Primary Mortgage Market Survey shows the average 30-year fixed rate mortgage falling below 4 percent, dropping to 3.94 percent nationwide. It's the lowest average 30-year fixed reading in the survey's history.

In addition, Freddie Mac shows the 15-year fixed and 5-year ARM making new all-time lows, too, falling to 3.26% and 2.96%, respectively.

It's a great time to be shopping for a mortgage or buying a home in Santa Clara. Because mortgage rates are dropping, housing payments are dropping, too. As compared to 8 months ago, for every $100,000 borrowed, homeowners now pay $66 less principal + interest each month.

On a $300,000 mortgage, that's $71,280 saved in 30 years.

Mortgage rates have been lower for several reasons, some of which include :

• U.S. economic growth has been slower-than-expected
• Uncertainty surrounds Greece and the Eurozone
• The Federal Reserve's "Operation Twist"

In general, demand for mortgage bonds has been high and that's caused mortgage rates to fall. It should be noted, however, that although the 30-year fixed rate mortgage fell below 4 percent this week, the amount of discount points required to lock that rate rose by 10 basis points, or $100 per $100,000 borrowed.

Homeowners in California are paying bigger fees for these lower rates. If you plan to move within a few years, these fees may wipe out your low-rate savings.

As you shop for a mortgage, pay attention to more than just rates. Low rates are great, but not when they come with high costs. Talk to your loan officer for help with making a plan than works for you.

A Mortgage Rate Strategy Ahead Of Friday's Jobs Report

Mortgage rates are prepped to make big moves in the next 36 hours. Is it time for you to call in your rate lock?

Friday, at 8:30 AM ET, the Bureau of Labor Statistics will release the Non-Farm Payrolls report for September. Issued monthly, the "jobs report" offers sector-by-sector job creation figures from the month prior, and reports on the national Unemployment Rate.

Last month, exactly zero net new jobs were created, the government said. This month, economists expect a net 60,000 new jobs created.

Depending on where the actual monthly figure falls, FHA and conforming mortgage rates in Santa Clara may be volatile. The jobs reports tends to have out-sized influence on the mortgage bond market.

The connection between the jobs market and the mortgage market is fairly straight-forward. As jobs go, so goes the economy. This is because more working Americans leads to a stronger economic base.

1. When more people work, consumer spending grows
2. When more people work, governments collect more taxes
3. When more people work, household savings increases

Each of these items are strengths to a recovering economy.

For rate shoppers, Friday's job report could cause mortgage rates to rise -- or fall. If the actual number of jobs created exceeded the 60,000 consensus estimate, look for mortgage rates to climb.

Conversely, if new jobs fell short of 60,000, expect that rates will drop.

Home affordability is at all-time highs because mortgage rates are at all-time lows. If you're under contract for a home or looking to refinance, eliminate some of your interest rate risk. Lock ahead of Friday's Non-Farm Payrolls release.

Get your rate lock in today.

A Mortgage Rate Strategy Ahead Of Friday's Jobs Report

Mortgage rates are prepped to make big moves in the next 36 hours. Is it time for you to call in your rate lock?

Friday, at 8:30 AM ET, the Bureau of Labor Statistics will release the Non-Farm Payrolls report for September. Issued monthly, the "jobs report" offers sector-by-sector job creation figures from the month prior, and reports on the national Unemployment Rate.

Last month, exactly zero net new jobs were created, the government said. This month, economists expect a net 60,000 new jobs created.

Depending on where the actual monthly figure falls, FHA and conforming mortgage rates in San Jose may be volatile. The jobs reports tends to have out-sized influence on the mortgage bond market.

The connection between the jobs market and the mortgage market is fairly straight-forward. As jobs go, so goes the economy. This is because more working Americans leads to a stronger economic base.

1. When more people work, consumer spending grows
2. When more people work, governments collect more taxes
3. When more people work, household savings increases

Each of these items are strengths to a recovering economy.

For rate shoppers, Friday's job report could cause mortgage rates to rise -- or fall. If the actual number of jobs created exceeded the 60,000 consensus estimate, look for mortgage rates to climb.

Conversely, if new jobs fell short of 60,000, expect that rates will drop.

Home affordability is at all-time highs because mortgage rates are at all-time lows. If you're under contract for a home or looking to refinance, eliminate some of your interest rate risk. Lock ahead of Friday's Non-Farm Payrolls release.

Get your rate lock in today.

Home Values Rose For the 4th Straight Month

The government is confirming what the private sector has already shown --  home values are on the rise.

The Federal Home Finance Agency's Home Price Index shows home values rose 0.8% in July.

July marks the fourth straight month that home values climbed and the FHFA's Home Price Index is the latest in a series of "rising home values" reports -- an encouraging trend for buyers and sellers in Santa Clara and nationwide.

Last week, the S&P Case-Shiller Index showed home value up nearly 1 percent in July. CoreLogic reached a similar conclusion.

Nationwide, values are back to their highest levels since November 2010. Clearly, the housing market in California is moving in the right direction. Or is it?

Although the data from the government and from private firms such as CoreLogic is encouraging, it's also flawed. As such, we have to be careful about the conclusions we draw from the data.

The flaws of Home Price Index are glaring :

1. Only homes backed by Fannie Mae or Freddie Mac are included in the index. In today's market, because of the FHA's popularity, that leaves 1 of 3 homes "uncounted".
2. Only home resales are counted. New home sales are omitted entirely.
3. The data comes with a 60-day delay. The October market is different from July's.

Despite these shortcomings, however, the Home Price Index remains relevant. It's among the most through home valuation models and it's often used by economists and policy-makers.

When the Home Price Index is rising, Wall Street and Capitol Hill take notice. For residents of "Main Street", however, the data may not be as important. To get local, up-to-date market statistics in Willow Glen, for example , talk with a professional real estate agent.

Since peaking in April 2007, the FHFA's Home Price Index is off 17.6 percent.