Apartment rents in 79 U.S. metro areas were up, according to the Reis report. San Francisco and San Jose were among two of the cities experiencing fast rental growth increases, with rents increasing more than 6 percent. The Oakland/East Bay area also was on the rise, with rents up by 4.6 percent.
Mortgage rates haven’t budged, remaining at historic lows throughout the year amid economic growth that has generated 2.5 million net new hobs over the past 12 months and a record high stock market. But uncertainty looms in light of Federal Reserve Chair Janet Yellen’s announcement that the economic stimulus program known as “quantitative easing” will halt by year’s end. Moreover, an increase in the short-term Fed funds rate is expected by the middle of 2015. The course of U.S. monetary policy, in short, will be less accommodating going forward
Making monthly rent payments on time may help potential home buyers increase their credit scores. Credit reporting agencies Experian and TransUnion are reportedly starting to incorporate verified rental payment data into credit files that are used to compute consumers; credit scores. So renters who never miss a payment may benefit from their payment history when they apply for a mortgage.
Some of you may already know this but for those who don’t some recent changes are being made to the way FICO scores are being tallied. On August 7th, Fair Isaac Corp announced that it will discontinue using in its credit score calculation any unpaid bill reports where the bill was actually paid in its scoring. In addition it will give less weight for any unpaid medical bills. So if you have a client with a credit score on the edge of loan qualification and where trying to get qualified but couldn’t this might be the break they need. The new scoring model will roll out later this fall so check with your loan Brokers for more details on this issue.
Did you know?
You can purchase a home using a reverse mortgage.
The Home Equity Conversion Program (HECM) for purchase is an innovation that helps seniors use the equity from the sale of their previous house to fund the purchase of their next home.
The HECM for Purchase is a Federal Housing Administration (FHA) insured home loan that allows seniors to use the equity from the sale of a previous residence to buy their next primary home in one transaction. Regardless of how long they live in the home or what happens to their home’s value, they only make one, initial investment (down payment) towards the purchase.
On new Applications submitted on or after August 16, 2014, FNMA’s new wait period for a Short Sale or Pre-Foreclosure sale is being updated to a four-year waiting period; though a two-year waiting period will be permitted if the event was due to extenuating circumstance (must be a major extenuating circumstance like death or a wage earner) and the loan complies with all other requirements.
By Kate Warne, PH.D., CFA
Reposition your portfolio. Make sure you have the appropriate mix of stocks and bonds. After last year’s market gains, you may need to add fixed income to help return to the investment mix that fits your long-term financial goals and tolerance for risk. Consider adding short- and intermediate-term fixed income to help reduce your portfolio’s sensitivity to rising interest rates.
- Prepare your emotions and expectations for greater volatility. If you know that it’s normal for stocks to drop by 10% annually, you’re likely to be less surprised and less likely to overreact when a pullback occurs.
- Take a systematic approach. If you’re concerned that stocks are high, consider investing the same amount every month to build a well-diversified portfolio. While this doesn’t prevent a loss or guarantee a profit, it can help remove concerns about the market’s moves from your decision making.
- Pullback offer opportunities. Consider adding stocks when their prices decline, if appropriate for your situation. Buying during dips and corrections has resulted in higher returns in the past, since stocks rose on average over the following six months and year.
By Kate Warne, PH.D., CFA
Keep in mind that stocks rarely rise smoothly over time, and pullbacks certainly occur along the way. Make sure you’re prepared to stay invested and consider the opportunities pullbacks offer by remembering:
- Market declines are normal, frequent and not a reason to sell quality investments.
- Market declines can provide an opportunity to buy quality investments at a lower price.
- Market declines are out of your-control- so focus on what you can control. This can help you manage your emotional reaction when fears overshadow long-term fundamentals.
Higher mortgage rates will be “a headwind” for home buyers.
“Job growth continues to be strong in California and that means people feel more comfortable buying a home and mortgage credit has been very, very tight for the average person.
Job growth hasn’t been evenly distributed throughout the state, however. That means employment’s cushioning effect against the Fed taper will be felt differently in different housing markets.
Job growth has been especially strong in the technology sector, which benefits Northern California and certain pockets of Southern California.
As a result, the taper might be felt more intensely in those areas because they don’t have much job growth to offset its effects.