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Source: Inman News

In order to keep your loan closing as smooth and hassle-free as possible, there are some simple steps to follow so there are no surprises while waiting for final approval.  It’s important to remember that obtaining a home loan is a very interactive process, so avoid common pitfalls, like changing bank accounts or applying for new credit.
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Mortgage Market Guide Weekly – August 18, 2014

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In This Issue

Last Week in Review: Disappointing Retail Sales figures, tame wholesale inflation, and debt worries in Europe helped keep home loan rates near their best levels of the year.

Forecast for the Week: Several key housing reports will be released, along with news on inflation at the consumer level.

Last Week in Review

“Like sluggish waters through a marsh….” The poet Sir Walter Scott wasn’t talking about the latest Retail Sales numbers, but his words paint a pretty vivid picture…and a pretty accurate one regarding this report.

Retail Sales were unchanged in July, kicking off the third quarter on a down note as consumer spending slows. The reading was the slowest rate in six months, and was dragged down by lower sales in virtually all areas of the economy, including motor vehicles and parts sales, department stores, furniture and home furnishing stores, and electronic and appliance stores. This was a bad report and not indicative of an economy growing at a 4 percent annual rate, as suggested by the recent first reading of second quarter Gross Domestic Product. It will be important to monitor reports like GDP and Retail Sales in the coming months, to see if our economy shows signs of improvement… or of slowing down.

In housing news, RealtyTrac reported that foreclosure activity across the nation rose for the first time in four months, up 2 percent from June to July as lenders scheduled more properties for auction. However, foreclosure activity is still down 16 percent from last year, and July marked the forty-sixth straight month in which activity declined on an annual basis. Overall, this area of the housing market continues to move in the right direction.

And there were two other bits of Bond-friendly news that helped keep home loan rates near some of their best levels of the year. Here at home, inflation at the wholesale level remains tame, as evidenced by the Producer Price Index. Remember that inflation is the arch enemy of Bonds—and therefore, of home loan rates, which are tied to Mortgage Bonds—as inflation reduces the value of fixed investments like Bonds. And overseas, news that debt problems in Europe continue to wreak havoc in the region prompted investors into the safe haven of our Bond markets.

The bottom line is that home loan rates remain near some of their best levels of the year and now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

Housing dominates the headlines this week with several important reports.

  • Housing news kicks off on Monday with the National Association of Home Builders Housing Market Index. In addition, July Housing Starts and Building Permits will be reported on Tuesday, followed by July Existing Home Sales on Thursday.
  • The closely watched Consumer Price Index will be released on Tuesday, and investors will be looking to see if there are any inflation pressures at the consumer level.
  • Weekly Initial Jobless Claims will be reported on Thursday, along with news from the manufacturing sector via the Philadelphia Fed Index.

    In addition, the minutes from the Fed’s July meeting of the Federal Open Market Committee will be released on Wednesday and those always have the potential to move the markets.

    Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

    When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.

    To go one step further—a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

    As you can see in the chart below, geopolitical headlines have helped Mortgage Bonds improve. Home loan rates remain near some of the best levels of the year and I will continue to monitor them closely.

    Chart: Fannie Mae 4.0% Mortgage Bond (Friday, August 15, 2014)


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Choosing an Exterior Door

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Replacing your front door can pay for itself by increasing your home’s value. In fact, installing a steel door is the No. 1 home improvement project with a 96.6% return on investment, according “Remodeling” magazine’s annual “Cost vs Value Report.”

What’s more, if you choose an energy-efficient exterior door, you may trim up to 10% off your energy bills. (With utility bills averaging $2,200 annually, that’s a savings of as much as $220.)

But how do you know which door is right for you? Make your decision by comparing the three main materials available for exterior doors: steel, fiberglass, and wood.


If you’re looking to save money, a steel door may be a good choice, particularly if you have the skills to hang it yourself. A simple, unadorned steel door can sell for as little as $150 (not including hardware, lock set, paint, or labor) and typically runs as much as $400 at big-box retailers. Steel offers the strongest barrier against intruders, although its advantage over fiberglass and wood in this area is slight.

Still, the attractive cost of a steel door comes with an important caveat: Its typical life span under duress is shorter than both fiberglass and wood. A steel door exposed to salt air or heavy rains may last only five to seven years. Despite steel’s reputation for toughness, it actually didn’t perform well in “Consumer Report’s” testing against wood and fiberglass for normal wear and tear.

With heavy use, it may dent, and the damage can be difficult and expensive to repair. If your door will be heavily exposed to traffic or the elements, you may be better off choosing a different material.


Fiberglass doors come in an immense variety of styles, many of which accurately mimic the look of real wood. And if limited upkeep is your ideal, fiberglass may be your best bet.

Fiberglass doesn’t expand or contract appreciably as the weather changes. Therefore, in a reasonably protected location, a fiberglass entry door can go for years without needing a paint or stain touch-up and can last 15 to 20 years. Although it feels light to the touch, fiberglass has a very stout coating that’s difficult for an intruder to breach; and its foam core offers considerable insulation.

Fiberglass generally falls between steel and wood in price; models sold at big-box stores range from about $150 to $600. “Remodeling” magazine lists the cost of a fiberglass entry-door replacement project at around $2,800. Although a fiberglass door doesn’t generate as high a return as a steel door, it recoups about 71% in home value.


Wood is considered the go-to choice for high-end projects; its luxe look and substantial weight can’t be flawlessly duplicated by fiberglass or steel — though high-end fiberglass products are getting close. If your home calls for a stunning entry statement with a handcrafted touch, wood may be the best material for you.

Wood is usually the most expensive choice of the three — roughly $500 to $2,000, excluding custom jobs — and requires the most maintenance, although it’s easier to repair scratches on a wood door than dents in steel or fiberglass. Wood doors should be repainted or refinished every year or two to prevent splitting and warping. (“Remodeling” magazine’s “Cost vs Value Report” doesn’t include a wood entry-door replacement project.)

If you’re concerned about the environmental impact of your door as well as its energy efficiency, you can purchase a solid wood door certified by the Forest Stewardship Council (FSC), which assures you that the wood was sustainably grown and harvested.

Tracing the environmental impact of a particular door — from manufacturing process to shipping distance to how much recycled/recyclable content it contains — is quite complicated and probably beyond the ken of the average homeowner, notes LEED-certified green designer Victoria Schomer. But FSC-certified wood and an Energy Star rating are an excellent start.

A final note on choosing a door based on energy efficiency: Because efficiency depends on a number of factors besides the material a door is made of — including its framework and whether it has windows — look for the Energy Star label to help you compare doors.

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