” Last year, I told you that “a housing recovery will probably begin within a year or so.” I was dead
wrong. We have five businesses whose results are significantly influenced by housing activity. The
connection is direct at Clayton Homes, which is the largest producer of homes in the country,
accounting for about 7% of those constructed during 2011.

Additionally, Acme Brick, Shaw (carpet), Johns Manville (insulation) and MiTek (building products,
primarily connector plates used in roofing) are all materially affected by construction activity. In
aggregate, our five housing-related companies had pre-tax profits of $513 million in 2011. That’s
similar to 2010 but down from $1.8 billion in 2006.

Housing will come back – you can be sure of that. Over time, the number of housing units necessarily
matches the number of households (after allowing for a normal level of vacancies). For a period of
years prior to 2008, however, America added more housing units than households. Inevitably, we
ended up with far too many units and the bubble popped with a violence that shook the entire economy.
That created still another problem for housing: Early in a recession, household formations slow, and in
2009 the decrease was dramatic.

That devastating supply/demand equation is now reversed: Every day we are creating more households
than housing units. People may postpone hitching up during uncertain times, but eventually hormones
take over. And while “doubling-up” may be the initial reaction of some during a recession, living with
in-laws can quickly lose its allure.

At our current annual pace of 600,000 housing starts – considerably less than the number of new
households being formed – buyers and renters are sopping up what’s left of the old oversupply. (This
process will run its course at different rates around the country; the supply-demand situation varies
widely by locale.) While this healing takes place, however, our housing-related companies sputter,
employing only 43,315 people compared to 58,769 in 2006. This hugely important sector of the
economy, which includes not only construction but everything that feeds off of it, remains in a
depression of its own.

I believe this is the major reason a recovery in employment has so severely
lagged the steady and substantial comeback we have seen in almost all other sectors of our economy.
Wise monetary and fiscal policies play an important role in tempering recessions, but these tools don’t
create households nor eliminate excess housing units. Fortunately, demographics and our market
system will restore the needed balance – probably before long. When that day comes, we will again
build one million or more residential units annually. I believe pundits will be surprised at how far
unemployment drops once that happens. They will then re awake to what has been true since 1776:
America’s best days lie ahead.”

Two weeks until Christmas!  The end of the year is here and of course there is a
lot of talk of what the new year brings.  Here is a quick update of some of the
changes that could come about:

1) Once again the talk about increasing fees for FHA back loans.  If you
remember FHA is require to hold a certain amount in reserves and for the last
few years they have been well short of that amount.  Even though the recent
increase in fees has helped replenish the reserve fund, the forecast for more
defaults and costs has FHA saying they might have to raise the fees again.  The
rumors are that people with lower credit scores will be getting hit with most of
the increase. Borrowers know this could be on the way!! So make a move
now before costs increase even more.

2) After numerous attempts to lower the VA upfront fee, it now has been
restored to their original amounts until 2016.  So no decreases for VA
borrowers.  This program still remains one of the best programs available.

3) Is Fannie and Freddie on their way out?  The Mortgage Finance Act of
2011 if passed would create a new FDIC-like guarantee facility and once it
establishes value will be privatized.  This is one of the better plans that has
been introduced because this will allow a QRM (Qualified Residential Mortgage)
to only have 5% down payment.  The current QRM part of the Dodd/Frank Bill calls
for a 20% down payment for a QRM which will obviously hurt a already fragile
housing market if Freddie and Fannie are eliminated.  There is a lot involved in
order to eliminate Freddie and Fannies so we will see how all this plays
out.

4) Finally the major market mover…how will EU leaders handle their
financial mess and what affect will it have on the rest of the world.

Have a great week!

Chris Blount

Courtesy of Jeff Dicks Real Estate Keller Williams Realty

Search Raleigh Real Estate or Heritage Wake Forest Homes

Very rarely do I have something at the tip of my tongue not be thankful for. The years continue to roll along and my kids continue to get taller as I shrink. I’m often reminded by my lovely wife Christine that we are very fortunate and as I like to say life gives you lemons if you continue to complain of life’s challenges.

I came across a snippet of Jon Gordon’s work today that I couldn’t help but share.

They are two words that have the power to transform our health, happiness, athletic performance and success. Research shows that grateful people are happier and more likely to maintain good friendships. A state of gratitude, according to research by the Institute of HeartMath, also improves the heart’s rhythmic functioning, which helps us to reduce stress, think more clearly under pressure and heal physically. It’s actually physiologically impossible to be stressed and thankful at the same time. When you are grateful you flood your body and brain with emotions and endorphins that uplift and energize you rather than the stress hormones that drain you.

Gratitude and appreciation are also essential for a healthy work environment. In fact, the number one reason why people leave their jobs is because they don’t feel appreciated. A simple thank you and a show of appreciation can make all the difference.

Gratitude is like muscle. The more we do with it the stronger it gets- Jon Gordon

Take note and you may just survive the holidays…….and beyond

Jeff Dicks

Jeff Dicks Real Estate

“Following last week’s euphoria over the European Summit plan, investors are
in a more skeptical mood this week,” said BMO Capital Markets. “In our view,
while the plan will help contain the risk of a European banking crisis and
financial contagion to other countries, it falls well short of resolving the
crisis.”

So Treasuries are starting off the day stronger as more investors are seeking
safety over riskier stocks.  This will allow us to see a little bit of
improvement in rates today.

Rate
update.  Remember these are start rates…credit score, LTV, and other factors
go into final rate.

30yr
Fixed rate 4.125%  APR 4.229%

15 yr
Fixed rate 3.5%  APR 3.765%

5/1 Arm
3.125%   APR 3.207%

30 yr
FHA Fixed 3.75%  APR 4.113%

Have a
fun and safe Halloween!

Chris Blount
Branch Manager
Integrity Mortgage/AES Lending

Courtesy Jeff Dicks Real Estate

Raleigh Homes Market Update

Do you know that the best time to post things to Facebook is 8am in the
morning?  What surprises me is that one of the worst times is 3pm.

Anyways,
on to Obama’s proposed refi program.  By the sounds of it this program might be
the ticket to getting a lot of people who are underwater refinanced.  The
question is will the guidelines be relaxed enough to allow borrowers to refi and
it make sense.  Remember in order to qualify for this program your loan will
have to be owned by Fannie or Freddie and it was transferred to them before May
31 2009.  So in other words if you bought or refinanced since May 31 2009 then
your loan will not qualify.  The final details will be out Nov 15th so I will
follow up once we get that info.  In the mean time you can check to see if your
mortgage is owned by either enterprise by going to Fannie Mae or Freddie Mac

In
other news the roller coaster continues in the markets.  After the EU meeting
yesterday they agreed to boost the bailout fund and struck a deal with private
banks to accept a 50% loss on Greek bonds…Wow!.  So even though job numbers
are not the greatest and earnings reports have been so so, just knowing EU looks
like they are on track to get their problem under control gave markets a nice
warm fuzzy feeling.  With that said, Stocks are up and bonds are down so rates
are back on the higher end today at 4.25% on a 30 yr fixed….more than likely
they will increase to 4.375% by end of day.  Until the next big announcement
comes it looks like we will be treading on the higher end of our rate
outlook.

Chris Blount AES Lending

Courtesy of Jeff Dicks Real Estate

Recently, I returned from our hopefully, annual trip to Northern Michigan. We were at my wife’s parents 50th Wedding Anniversary. Quite the feat by today’s standards. Our family trip consisted of a 12 hour days drive to West Bloomfield and a quickie 4 hour tilt up to Torch Lake. I have had the opportunity to visit Torch Lake on a few occasions and to be frank, it’s one of the top fresh water lakes on the planet. Pristine sands and aqua marine colored water makes you beleive your in the Bahamas.

Not to be lost amongst our journey was my 5pm visit to the news to catch up on the daily rantings and more specifically the inability of our congressional leaders to come to a deal on the raising of the debt ceiling. I’ll admit to being a moderate however, I have never seen such a power struggle between parties.

I risk the wrath of stout Democrats & Republicans alike. My opinion of this whole mess is were caught in an election cycle, and the simple lack of moral responsibility amongst our leaders. Each side is posturing for position as the Primaries loom in early 2012.

This simply is ridiculous. I beg for for any congressional leader or senate member to put his seat on the line and tell us the truth & nothing but. Should we sacrifice the Mortgage Interest Tax Deduction, trim Social Security benefits to maintain long-term solvency, raise income taxes, all without creating class warfare?

I ‘m certainly not a politician nor would I like to be, however I wish the members of the senate & congress realize they are the few and they represent over 300 million Americans and at least put on the table and play it straight.

Ahhhh…..next year’s family holiday Torch Lake and no television.

Like it or not, there are a couple of guidelines bankers, and mortgage lenders use to determine how much loan you can afford.

One guideline is the Payment to Income Ratio. This guideline compares your income- or your total household income-to the amount of mortgage your considering.

To calculate the “payment” part of the formula, the lender will take the mortgage payment (principal & interest) and add it to Propeety Taxes and Insurance. Hence the term “PITI” (principal, interest, taxes and insurance).

Usually lenders will loan up to 28% of your total household income.

But before your home free, there’s something else you need to know..

It’s called the Debt to Income Ratio. Debt refers to ALL, the major monthly payments other than your mortgage (PITI). To arrive at this amount, the lender will consider…

Your car payment
Your credit card debt & payments.
Any IRS liens or payments due.
Any other payments and debts you have (boat, second home, etc)

Then they’ll compare your total debt to your ability to make current payments with your new home loan added into the equation.

Now here’s the “catch”. Each mortgage company sets diffferent limits on your Debt to Income Ratio, which it is critically important to find the right lender!

Don’t follow the “canned” financial advice like you see on TV. Most of the advice is “rule of thumb”, and designed for the lowest credit rating and the highest rates.

Think about this….

If you spend two or three days to find a loan that saves you $40,000 to $150,000 or more overs it’s term, your time is WELL WORTH SPENT! Doing a little homework on your own will literally save you thousands over the term of your loan.

If your in the market for a new or re-sale home in the Triangle area of North Carolina call us today at Jeff Dicks Real Estate – 919-793-4730

We look forward to putting our award-winning team to work for you

Search Raleigh, Wake Forest, Cary Homes

MCLEAN, Va., May 5, 2011 /PRNewswire/ — Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS^®), which shows mortgage rates drifting lower with the 30-year fixed-rate mortgage matching the yearly low of 4.71 percent, and the 15-year fixed hitting a new yearly low of 3.89 percent.

News Facts

• 30-year fixed-rate mortgage (FRM) averaged 4.71 percent with an average 0.7 point for the week ending May 5, 2011, down from last week when it averaged 4.78 percent. Last year at this time, the 30-year FRM averaged 5.00 percent.

• 15-year FRM this week averaged 3.89 percent with an average 0.7 point, down from last week when it averaged 3.97 percent. A year ago at this time, the 15-year FRM averaged 4.36 percent.

• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.47 percent this week, with an average 0.6 point, down from last week when it averaged 3.51 percent. A year ago, the 5-year ARM averaged 3.97 percent.

• 1-year Treasury-indexed ARM averaged 3.14 percent this week with an average 0.5 point, down from last week when it averaged 3.15 percent. At this time last year, the 1-year ARM averaged 4.07 percent.

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage. Visit the following links for Regional and National Mortgage Rate Details and Definitions.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

• “Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week. For instance, real economic growth in the first quarter fell short of the market consensus forecast and represented the slowest pace since the second quarter of 2010. In addition, both the manufacturing and service sectors exhibited growth at a slower rate in April.

• “Data reports on the housing market, on the other hand, were a little more uplifting. The National Association of Realtors^® reported pending home sales rose in March for the second month in a row to the highest index reading since November 2010. Also, the Federal Reserve reported credit standards among commercial banks for prime mortgages were unchanged on net in the second quarter of the year, following two quarters of tightening.”

Get the latest information from Freddie Mac’s Office of the Chief Economist onTwitter: @FreddieMac

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

SOURCE Freddie Mac

Related articles

• HELP FOR HOMEOWNERS – HARP extended thru 2012(theraleighmortgageguy.com)
• Home Sales Drop %15.1 in Raleigh North Carolina(theraleighmortgageguy.com)

Mortgage rates are low… but people see them beginning to rise. The fear of higher rates will force potential buyers to make purchases. This surge of sales could allow homebuilders to drastically beat earnings estimates in 2011. Optimism, is beginning to surge among those whom have been waiting, and waiting for a great entry point into the housing market.

Having looked at a mortgage rate chart dating back to the early 1900’s housing is the most affordable it’s ever been.