Emanuel Rodriguez

If you haven't noticed, mortgage rates have gone up this past week and it does not look like it is going to get better any time soon.

The reason for the reason spike in mortgage rates is good old supply and demand. You see mortgage rates are bonds and are traded in the bond market. Just like anything else, in order for the bond market to function correctly there needs to be equal buyers and sellers. If you have too much buyers or too much sellers, prices are going to be affected and begin to move sharply either way.

Right now there is too much supply of bonds available for purchase.

The federal government needs so much money that it keeps selling bonds in the open market to get cash to pay for everything. By them doing this, they are flooding the market with an over supply of bonds which is causing the price of bonds to go down. Now bonds are tricky because if prices go down, then yields (interest rates) go up. And if the price of bonds go up (which is when there is more demand then supply) yields (interest rates) go down. So if there are more buyers than sellers then buyers will be willing to pay more for the bond which will result in a lower yield(rate) to them.

Picture yourself buying a house in the height of the real estate boom.

You probably paid more than the house is worth today because of the increased demand. Well just like you buying a house in the middle of the boom, bond investors were until recently buying bonds in the height of the bond market boom. When the stock market took a tank, many investors went to the security of bonds which increased the demand for those bonds tremendously. There were many more bond buyers than sellers. Fast Forward to today and now you have more sellers than buyers. The federal government is selling so many bonds and there in not as many buyers anymore. Not to mention all of the refinances that have gone on in the last couple of months that have to be sold too. We are starting to see some better economic news and so these bond investors to free up cash to buy stocks are selling their bonds too!!! Way too much supply and not enough demand.

Now of course there are a million other technical things that affect the price of bonds which affect mortgage rates. For example, good economic news could mean now that inflation is a threat. Imagine if you bought a mortgage note as an investor and agreed to receive 4.5% on your money for 30 years. If the economy was showing any kind of improvement, then you will know that prices will likely go up (inflation). And those prices going up eat up your little 4.5% return for 30 years. So if you see these news, you will want more of a yield and not pay as much for that 4.5% note.

I know this may sound confusing and it is. But if you think about it, it makes a lot of sense. Everything goes back to supply and demand.

If you have any questions and/or would like to discuss, call me direct at 908 868 0685 or email me at erodriguez@arkmortgage.com

Hello All,

This Morning the Pending Home Sales Number came out. This statistic comes out on the first week of every month and measures the number of homes that are "pending" sale, in other words, under contract.

In the month of April, Houses that were under contract in the United States rose to 90.3 which is up 6.7% from last month. A score of 100 is average activity from 2001-2004.

What this means is that the buyers are out in full force and are putting homes under contract. It is believed that buyers are really taking advantage of the $8,000 tax credit and understanding that in order to receive it, they must close on their house before December 1st 2009.

The really good news for us in the Northeast Market is that Pending Home sales rose 32.6% in the month of April to 78.9. Although 78.9 is well below the average of 100, the increase of 32.6% is significant! We are seeing a lot of activity and the likelihood of it continuing is great.

If you have any questions or want to discuss, shoot me and email or give me a call direct.

Thanks

This is a great post card and it really hits home. All of the people pictured probably wished they had a place of their own to do as they wish, but they have no privacy because of the roomates.

So....Is it time to get YOUR OWN place?

Stop throwing your money away on rent. Of course everyone knows that now is a great time to invest in a home of your own - especially if you're a first-time buyer.

Find out how much home you can really afford.

Call me today to schedule your FREE consultation and I'll send you my Home Buyer's Handbook and Credit Scoring Guide.

An new announcement came out last week about the $8,000 tax credit that is currently being offered to first time homebuyers in the U.S. It seems like the government is not really satisfied with the activity of home purchases that have been going on and so they are adding another incentive to the program.

Yes interest rates have been at all time lows and this has really helped out current home owners. While mortgage applications are up, many of these new applications are for refinancing and not for purchasing, which still leaves us with an over supply of homes issue.

The new government announcement ups the anti and now the government is allowing qualified individuals to get the $8,000 before next year to pay for closing costs!!

Just so everyone is clear, if you are a first time homebuyer and you buy a house in between April 1, 2009 and Dec 31, 2009 you will get an extra $8,000 check from the IRS!!

Even if you do not have to file a tax return and you are exempt from paying taxes. If this is you, you simply file form 5405 to get the $8,000 check!

Now instead of waiting for the check, you can get an advance on it and use the money for closing costs. *Important note here, you can not use the money for a down payment.* You still have to come up with the 3.5% down and the $8,000 can be used for closing costs only.

If anyone has any questions or simply want to discuss, send me an email at erodriguez@arkmortgage.com.

The American Recovery Reinvestment Act of 2009 that was signed into law last week by President Obama has a portion of it that pertains to nearly $300 billion in tax relief for both individuals and business. Some highlights include the first time homebuyer credit, which is now $8,000 and after 3 years there is no repayment that is required to the IRS. Nice! Also there is going to be a deduction available on that tax paid for any autos that you purchase in 2009 (not lease). Another change is that the HOPE education credit can now be claimed for all 4 years while a child is enrolled in a 4 year accredited school, before you can only take the HOPE credit for the first two years of your college degree. Also you will start to see a bit more on your paycheck as your witholdings will decrease.

There is of course more than this, but in my eyes these are the highlights. These highlights may not be as important to you as others may be that are mentioned in the link below, so take some time to read over the material so you can know what is available to you and how it can benefit you in your particular situation.

http://www.cchsfs.com/email/pdf/House_Senate_Recovery_Act_2009.pdf

Again these tax law changes are for 2009 and do not apply for 2008.

If you would like to discuss, contact me direct at 908 868 0685

Thanks

Emanuel

erodriguez@arkmortgage.com