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Blogs on Mortgages, Markets And Other Items Of Interest. Stay Up To Date!

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Financial Markets Update

12/27/2016

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The market was in a holiday spirit last week as all major indices posted gains. The Dow, once again, failed to touch the magical milestone of 20,000 points. Last Tuesday, the index hit an all-time high of 19,988. For the week, the Dow ended up 0.5 percent, the S&P returned 0.3 percent, and the Nasdaq rose 0.3 percent, logging their seventh straight week of gains -- the longest winning streak in two years. The equity market has been in rally mode since the U.S. election. The S&P 500 has gained more than 5 percent since the election, while the Dow has risen more than 8 percent. In the Bonds sector, for the week, the Ten-year treasury yield settled 5 bps down at 2.54 percent.

In major economic indicators released last week, the
economy expanded at a seasonally adjusted 3.5 percent annualized rate in the third quarter. This is above the government’s prior estimate of 3.2 percent due to upward revisions in consumer spending and business investment. Consumer spending, which added 2 percentage points to GDP, rose at a 3 percent annual rate, up from the prior estimate of 2.8 percent. Durable Goods Orders fell 4.6 percent in November, mainly due to a drop in civilian aircraft orders. Excluding aircraft and vehicles, new orders rose 0.5 percent. In the housing sector, for the month of November, New Home Sales jumped 5.2 percent to a 592,000 annualized rate while Existing Home Sales rose a surprising 0.7 percent to a 5.61 annualized rate. Co-op and condominium sales jumped 10 percent, outpacing a 0.4 percent drop in single-family units.

In international markets, Italy’s government has authorized a €20 billion bailout for the country’s third-largest lender and world’s oldest bank, Monte dei Paschi di Siena, which has been in operation since 1742. In other financial news, two European banks, Deutsche Bank and Credit Suisse, agreed to settle outstanding cases with the U.S. Department of Justice for $7.2 Billion and $5.3 billion, respectively.

The week between Christmas and New Year’s tends to be a quiet one. Investors will be watching for the Dow to touch 20,000. There is not much significance for the Dow hitting 20,000 other than an impressive way for stocks to cap off 2016. Let’s hope we can release those imaginary balloons this week. Investors will also be looking for Consumer Confidence, which comes out today, and Pending Home Sales, which will come out on Wednesday.

Thank you for your business and a Happy New Year!

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HOME BUYING PROCESS

12/19/2016

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Buying a home is one of the most exciting times in our lives. At Effective Mortgage Company we work very hard to make sure that you have a positive, fulfilling experience.


Here’s a simple, helpful walk-through of the entire home buying process from start to finish.

  1. Decide on your new neighborhood.
    Spend some time researching the cities and neighborhoods that appeal to you. Be sure to think about your “must haves” – for example, do you want to be near a good elementary school, or shorten your daily commute? What about county, parish or township taxes?
  2. Apply for home financing.
    This is an essential second step. Be sure to do this before you begin viewing homes – your Effective Mortgage Company, Loan Consultant can pre-qualify* you for financing so you can limit your search to affordable properties. You’ll also receive a Loan Estimate with details of your proposed financing.
  3. Find the right property.
    Hiring a REALTOR® to assist you can save you time and money. In addition to sharing his or her knowledge of neighborhoods and available properties, a REALTOR® can help negotiate a better price with the seller.
  4. Discuss your financing options with your Loan Consultant.
    Depending on your credit score, down payment, and other factors, you may qualify for more than one loan product. Your Loan Consultant will help you decide which one is the best fit.
  5. Arrange for a home inspection.
    Even though Effective Mortgage Company will have your home professionally appraised, it’s always a good idea to hire a professional home inspector – especially if you’re buying an older home. If any major problems are found, you may be able to negotiate repairs or a repair allowance with the home’s seller.
  6. Get ready to close on your home’s financing.
    Your Loan Consultant will present you with a Closing Disclosure. This document clearly states the true cost of your home’s financing, the funds owed at closing and any applicable conditions. You’ll also need to shop for homeowner’s insurance before closing.
  7. The big day’s here!
    During your closing, you’ll sign your loan documents and present funds to cover your down payment and other costs. Depending on your state, you may receive a deed of trust that secures your mortgage note and other documents related to your purchase.

Now … all that’s left is to collect the keys to your home and celebrate!


*A pre-qualification is not an approval of credit and does not signify that underwriting requirements have been met.


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DIY Soy Candles

12/16/2016

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New Fannie Mae Loan Limits

12/15/2016

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General Loan Limits for 2017

The general loan limits for 2017 have increased and apply to loans delivered to Fannie Mae in 2017 (even if originated prior to 1/1/2017). This is the first time the base loan limits have increased since 2006.

Maximum Original Principal Balance for 2017 (Conforming Limit)
Units   Contiguous States, District of Columbia, and Puerto Rico           Alaska, Guam, Hawaii, and the U.S. Virgin Islands
1           $424,100                                                                                              $636,150
2           $543,000                                                                                              $814,500
3           $656,350                                                                                              $984,525
4           $815,650                                                                                              $1,223,475

Maximum Loan Limits for High-Cost Areas for Mortgages Acquired in Calendar Year 2017 (High Balance)
All but 87 counties (or county equivalents) will see a loan limit increase.
Units        Contiguous States, District of Columbia+                Alaska, Guam, Hawaii, and the U.S. Virgin Islands
1               $636,150                                                                        $954,225
2               $814,500                                                                        $1,221,750
3               $984,525                                                                        $1,476,775
4               $1,223,475                                                                     $1,835,200

+A number of other states and Puerto Rico do not have any high-cost areas in 2017.
Note that the loan limits apply based on the original loan amount, rather than the unpaid principal balance (UPB).



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Market Commentary

12/13/2016

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Dec 12, 2016Mortgages experienced a rough week as speculation of an expanding economy pushed mortgage rates higher as equities rallied. Both the Dow Jones Industrial Average and the S&P 500 closed out last week at all-time highs, while the yield on the U.S. 10yr Treasury was pushed towards 2.50%.

The FOMC rate decision, and Janet Yellen’s press conference on Wednesday, certainly highlight the week ahead, but there’s a fair amount of other U.S. data as well this week. Given the ECB meeting last week and the recent run up in oil, CPI data on Thursday will be closely watched. The impact in the markets of the formation of a new government in Italy remains to be seen. Other potentially interesting international events include, a meeting of EU leaders on Thursday to discuss migration issues, the Brexit process, and a meeting between Japan PM Abe and Russia President Putin the same day. It may sound a bit old, but the expectation this week, is continued volatility in the mortgage markets.

Economic Calendar for the week of 12/12/2016 to 12/16/2016:
Monday: Monthly Budget Statement
Tuesday: NFIB Small Business Optimism and Import Price Index,
Wednesday: MBA Mortgage Applications, Retail Sales, PPI Final Demand, Industrial Production, Manufacturing Production, Capacity Utilization, Business Inventories and FOMC Rate Decision
Thursday: Initial Jobless Claims, Continuing Claims, Consumer Price Index, Current Account Balance, Empire Manufacturing, Real Average Weekly Earnings, Philadelphia Fed Business Outlook, Bloomberg Consumer Comfort Index, and Markit US Manufacturing PMI
Friday: Housing Starts and Building Permits
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