5 Reasons it’s Time for a Home in 2012

It’s true that money can’t buy happiness, but knowing that the value of your assets will grow over time does give you peace of mind.

Negative press is leaving some home buyers stuck on the fence, but here are a few reasons to climb down.


1. In the long run you come out ahead; in the short run you enjoy your home. The paper value of your home won’t rise much in the next couple of years. But if you want a home where you can raise your children or retire for the rest of your life, the paper value will rise significantly, or probably double or triple during that time.


2. The recent survey by the Hartford/MIT Lab’s Home for a Lifetime survey shows that half of all homeowners prefer their current home for retirement. Another 10 percent may choose to retire there, but aren’t yet sure.


3. A home is like a savings account. Your initial costs of home buying will come back to you many times over during the life of your mortgage. Your stake in the home builds every month. You’ll have more than rent receipts in the future.


4. Mortgage payments are fixed; rental payments rise. On a fixed-rate mortgage, you know what your payment will be each month for years to come. (As inflation rises, you’ll be making those payments with less expensive dollars.)


5. Apartment rents through the third quarter of 2010 were up 2.4 percent nationwide for the year and up twice that amount in larger cities. Nice apartments were hard to find because the national vacancy rate is the lowest since 2006, according to a study by real estate research firm Reis, Inc.

There are many more reasons for having a home of your own, reasons that have little to do with the financial aspects:


Stability and community. You get to know the neighbors. Your kids won’t have to change schools. They can keep their friends. You get to know their teachers and which parks, neighborhood facilities and merchants are best for you. Studies show that as people develop positive relationships with neighbors, they have more happiness and less stress.


You get to be the boss. Dealing with a landlord and negotiating repairs are hassles you won’t have to deal with. As the boss of your own place, you can paint, renovate and redecorate as much as you want and in any color or style you want.

This Week’s Market Commentary

This week brings us the release of six reports that may influence mortgage rates, but only two of them are considered to be highly important. With no relevant auctions or speeches on tap, I suspect we will see much less movement in mortgage rates this week compared to the past couple of weeks.

With the wild swings in the markets last week, a calmer week won’t be too difficult to accomplish. We will still likely see more movement in the major indexes and mortgage rates, but probably to a lesser degree. There is no relevant data scheduled for release today, so look for the stock markets to drive bond trading and mortgage rates. Tuesday has two of the week’s six reports scheduled to be posted.

The first is July’s Housing Starts data. This report gives us an indication of housing sector strength and future mortgage credit demand. However, it isn’t considered to be of high importance to the bond market or mortgage pricing and usually doesn’t cause much movement in mortgage rates unless it varies greatly from forecasts.

July’s Industrial Production is Tuesday’s second report with a release time of 9:15 AM ET. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important to the markets and can influence mortgage rates slightly if it is a dead day for other news or events. Current forecasts are calling for a 0.4% increase in production, indicating some strength in the manufacturing sector. Good news for the bond market and mortgage rates would be a decline in output, signaling sector weakness.

One of the week’s key inflation indexes is July’s Producer Price Index (PPI) that will be posted early Wednesday morning. It will give us an indication of inflation at the producer level of the economy. There are two readings in the report- the overall index and the core data reading. The core data is more important because it excludes more volatile food and energy prices that can change significantly from month to month. Current forecasts call for no change in the overall reading and a 0.2% increase in the core data. A larger increase in the core data could push mortgage rates higher Wednesday morning. If it reveals weaker than expected readings, we may see mortgage rates improve as a result.

The PPI will be followed by the even more important Consumer Price Index (CPI) early Thursday morning. The Consumer Price Index is one of the most important reports we see each month as it measures inflation at the consumer level of the economy. As with the PPI, there are also two readings in the report. Current forecasts call for a 0.2% increase in the overall index and a 0.2% rise in the core data reading. Declines in the readings, especially in the core data, should lead to lower mortgage rates. However, stronger than expected readings will likely cause an increase to mortgage pricing Thursday

July’s Existing Home Sales report will be posted late Thursday morning. The National Association of Realtors will release this report, giving us a measurement of housing sector strength. It covers approximately 85% of home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts’ forecasts. It is expected to show an increase from June’s sales, meaning the housing sector strengthened last month. This would generally be bad news for the bond market and mortgage rates because a strengthening housing sector makes a broader economic recovery a little easier.

The third report of the day Thursday will come from the Conference Board, who will give us its Leading Economic Indicators (LEI) for July. This index attempts to measure economic activity over the next three to six months and is considered to be moderately important. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening more than thought. However, a weaker than expected reading means that the economy may not grow as much as predicted, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage rates Thursday if the stock markets remain calm and the day’s other data does not show any surprises. It is expected to show an increase of 0.2 % in the index, indicating minor economic growth over the next couple of months. The CPI will be the focus of the morning, so it will take a sizable difference between forecasts and its actual reading for this report to influence mortgage rates.

Overall, look for Thursday to be the busiest day of the week with the CPI being released, but Wednesday’s PPI can also cause plenty of movement in the markets and mortgage rates. Friday looks to be the lightest day. The rest of the week will likely be influenced by stock prices in addition to the moderately important economic data, which can be quite volatile as we have seen over the past couple weeks. Therefore, keep an eye on the markets and maintain contact with your mortgage professional if you have not locked an interest rate yet.

Low Mortgage Rates Make it a Good Time to Buy

With mortgage rates at a 30 year historic low, the Wall Street Journal is suggesting now is the best time to buy. Ken Rosen of the U.C. Berkeley Fischer Center for Real Estate said that mortgage rates will be much higher five years from now, and to take advantage of the current low rates.

The Wall Street Journal video below elaborates:

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How would a government shutdown affect the mortgage business?

The last time we went through a government shutdown in 1995, it was a pain, but not a panic. I can assure you my company has prepared all loans in our pipeline and are looking at new contracts not yet acquired for a worst case scenario, so the disruption will be minimal. If a shutdown would occur, these would be the top six areas that can affect us during a government shutdown:

FHA Case Numbers: For each FHA loan, we are required to order a FHA case number. This number is generated before an appraisal can even be ordered. With a shutdown, we may not be able to order case numbers. Because of this, it is critical to let us know if there is a contract executed on any loan, so that our office can go ahead and order a case number without risking the loan being on hold during a shutdown. Note: with the new FHA guidelines, a contract must be executed before a case number can be ordered.

The ability to close FHA loans is questionable, depending if HUD keeps its website running to obtain FHA case numbers and CAIVRS (During the November 1995 shutdown, case numbers could not be obtained, but this was prior to the internet and was a manual process). The shutdown in 1995 mainly caused a delay rather than a drop in FHA loan origination, but if lenders decide to stop accepting FHA applications, it could be a problem. I think we will see delays but not a complete shutdown of the FHA.

4506 IRS Transcripts: Each loan requires the verification of at least one tax return by the IRS to verify the numbers that each customer presents us on their tax returns. During a shutdown, this process would be delayed as the IRS wouldn’t be at work to verify the transcripts.

Verifying Employment of a Government Employee: We are required to verify the employment of each customer. If the customer is a federal government employee, we would be unable to verify his or her employment during a shutdown.

FEMA: Homes in a Flood Zone: Homes that are determined to be in a flood zone would not be able to close as flood insurance could not be obtained.

USDA: During a shutdown, the USDA office would be closed because they have government underwriters that insure behind the lender. With a shutdown, we would see delays with all USDA loans.

VA: Like the FHA, the disruption is possible -- but not absolute -- during a shutdown. This would all depend on if they continued to allow their website to function. A disruption would cause delays in VA appraisals and the issuing of certificates of eligibility. If the website was closed during a shutdown, we would see delays in all VA loans.

We are committed to you and all of our homebuyers. Stay tuned for updates in this very important time period.

Creative Ways to Retire Without Savings

Like many baby-boomers today, you may be faced with an upcoming retirement and a lack of a retirement savings account due to the rough economic times of the past few years.

A recent CBS MoneyWatch article tackles this problem by suggesting resourceful ways to make retirement work for you.

One bold idea is to pair up with another married, retiring couple, pooling together Social Security income for a manageable budget. Social Security income at age 66 will be $2,000 per month, with an additional $1,000 per month for the spouse, resulting in a $36,000 per year income.

If you find a like minded couple, consider moving into a three bedroom house together, making the combined household income $72,000. This is higher than the 2009 national average income.

Another tactic is to delay retirement until age 70, in which case your monthly Social Security income will increase to $2,640 per month. In this situation, your spouse would not need to delay past age 66 to receive the $1,000 per month. “You’d want to file and suspend your Social Security income at age 66, so your spouse can start the $1,000 monthly spousal benefit income at age 66,” advised the article.

At age 70, your combined income would be $43,680 per year following this plan. If you were to pair up with another married couple, that Social Security income would increase to $87,360 per year.

Your circumstances may not be right for such an arrangement, but this is just one example of creative and resourceful ways to head into retirement in this economic climate.

Staging Your Home For Sale

Home staging is important factor in selling your home, especially in a competitive market. A well-staged home can make the difference between a quick sale and a long, arduous process.

While you can hire professionals to stage your home, you can save money by doing it yourself. In the video below, an award-winning home staging professional gives tips and advice.

Princeton Capital Ranked #3 Company to Work For In Bay Area

In the Sunday edition of the Mercury News, the Bay Area News Group published their February survey results of the Top Work Places. We were ranked #3 for mid-sized companies (150 to 500 employees). The rankings were based upon surveys completed by employees which makes this honor even more special.

We also received a special award in the area of Ethics for the way we conduct business. Below are links to the rankings, our profile, the special awards listing, and information about how the rankings were compiled.

Don’t miss the picture of the “worker bees” which was printed on the front page of the special section in the newspaper.

Mercury News Top Workplaces List

Princeton Capital Profile

Ethics Award

Princeton Capital mentioned in Open Communication article in SJ Mercury

Congratulations, and especially thank you, to all employees and clients for making this one of the best places in the Bay Area to work! Princeton Capital is currently hiring loan officers; take a look at our website to get in contact and learn more.

“This is a huge honor, and purely reflective of all of [the employees'] individual efforts and dedication to each other,” said Rob Reid, CEO. “I am very honored to be part of this great team.”