The Conference Board’s index of leading economic indicators inched ahead 0.1% in May, matching April’s increase and equaling analysts’expectations. The index, released June 19, is designed to forecast economic activity in the next three to six months based on 10 components, including stock prices, building permits and initial claims for unemployment benefits.

The Producer Price Index (PPI), which measures the cost of goods before they reach store shelves, rose 1.4% in May, the biggest increase since November, the Labor Department said June 17. However, core PPI, which strips out energy and food prices, increased 0.2% in May, an improvement from a 0.4% rise in April.

Housing starts slumped 3.3% in May to an annual pace of 975,000 units, a level not seen since March 1991, the Commerce Department reported June 17. Although May housing starts were down 25% in the Midwest, 10.3% in the West and 4.4% in the South, the Northwest saw a 61.5%  jump, led by a rebound in multifamily projects. Meanwhile, building permits in May fell to an annual rate of 969,000, slightly better than the 960,000 rate that economists expected.

Pressured by rising mortgage rates, mortgage application volume fell 8.7% for the week ending June 13, the Mortgage Bankers Association reported. For the week ending June 18, Freddie Mac said rates on 30-year mortgages continued climbing, reaching their highest level in nine months, reflecting more concerns about what the Federal Reserve will do to combat a growing inflation threat.

The number of newly laid-off workers seeking unemployment benefits for the week ending June 13 fell by 5,000 to 381,000, the Labor Department  reported June 19. The biggest increases for jobless benefits came from California (10,7 and Florida (6,164).

Economic news due out this week includes reports on new home sales on June 25 and existing home sales on June 26.

Economic data compiled from government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com, and Yahoo Economic Calendar.

Buying or Re-Financing a home can be a confusing task if you are not familiar with the different types of loans that are available. Different types of loan suit different types of borrowers. One type of loan may be a good option for one borrower and a bad option for another.

First you should be familiar with the different kinds of loan programs.

• Fixed Rate Mortgage: The traditional fixed rate mortgage is the most common type of loan programs, where monthly principal and interest payments never change during the life of the loan.
• Adjustable Rate Mortgage (ARM): Adjustable rate mortgages (ARMS) are loans who’s interest rate can vary during the loans term. These loans usually have a fixed interest rate for an initial period of time and then can adjust based on current market conditions.
• Hybrid ARMs (3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM): Hybrid ARM mortgages , also called fixed-period ARMs , combine features of both fixed rate and adjustable rate mortgages.
• Interest Only Mortgages: A mortgage is called “interest only” when it’s monthly payment does not include the repayment or principal for a certain period of time.
• Components of an ARM: To understand an ARM, you must have a working knowledge of it’s components.
• Commonly used indexes for ARMs: There is a list of the most commonly used indexes by ARM lenders.
• Balloon Mortgages: Balloon mortgages have a note rate that is fixed for an initial period of time, and then the remaining principal is due at the end of the term.
• Reverse mortgage: is a type of home equity loan that allows you to convert cash while you retain home ownership.
• Graduated Payment Mortgage: is a loan where the payment graduates (increases annually for a predetermined  period (e.g. five or ten years) and then becomes fixed for the duration of the loan.

 What kind of loan program is best for you?

 So what kind of mortgage is best for you ? Fixed rate ? Adjustable rate ? Government loans ? The truth is there is no one correct answer. It all depends on the borrower’s situation.

If you plan to remain in the home for a short time, an adjustable rate mortgage is less risky than if you plan to stay in the home for many years.

Make sure you understand the maximum amount that your mortgage can increase in any single adjustment period and over the life of a loan.

Be sure to ask if loan is convertible and what the cost is.

As you shop around for mortgage make sure you understand all the costs associated with it. A higher cost should equal a lower rate.

APR includes the interest plus points, broker’s fee and credit charges you may have to pay as part of yearly dates.

In a nutshell, the best mortgage will have the lowest total costs (including mortgage plus cost to acquire the loan) for the time you plan to own your home. If you plan to live in the home only 5 years then 5 yr Hybrid ARM may be a better option than 30 yr fixed Rate mortgage provided the total costs are lower in 5 years, Hybrid ARM.

All lenders as part of a mortgage require a borrower carry an insurance policy that includes damage from fire, smoke, vandalism and theft. Many homeowners will upgrade their basic coverage to include personal liability and protection from additional hazards depending upon the risk factors and location.

Typically the hazard portion of a Home Insurance Policy usually protects furnishing and personal items as well as a detached structure or pool.You pay additional fees to cover the loss of expensive jewelry or computers or artwork, etc.

Tips:

• It is a good idea to include personal liability coverage. It is not required by lenders but it protects you from lawsuits over injuries and medical bills.
• Purchase a Homeowner’s Policy with a high deductible and only filing claims for large damages.
• Keep an inventory of personal items.
• Get all valuables like artwork, jewelery, etc appraised and keep their pictures in a safe location.
• Shop around and talk to several agents.
• The lowest quote may not be the best. Compare apple to apple, look at the reputation of the company and check the references. Ratings can be checked such as A.M. Best and Standard & Poors as well as Consumer Magazines.
• If you purchase Home and Auto Insurance together from the same company, you could receive a discount.
• Be aware that the total price you pay for your home is different than the cost to rebuild. Make sure your policy covers replacement costs.
• Check with your professional organizations for group discounts offered to select companies.
• Review your policy annually and make adjustments. Talk to your insurance agents for clarification.
• Depending upon the location you may be required to buy Flood Zone insurance. Your lender will make you to buy this insurance.
• Minor upgrades like security alarms, dead bolts, etc. can reduce your premium.

Reflecting the stimulus from government rebate checks, retail sales rose a full percentage point in May, double what economistswere anticipating; the Commerce Department reportd June 12. Not including the higher prices consumers paid for gasoline, retail sales still rose a strong 0.8% the biggest increase in a year.  

Sales of exsisting homes in Aprilalso caught economists off guard, climbing 6.3% instead of the negative 0.4% drop they were predicting. The new reading, issued June 9 by the National Association of REALTORS indicates that the drop in property values has started attracting more buyers and bargain hunters

 Soaring gasoline prices helped  push consumer inflation up 0.6% in May, the fastest pace in six months, the Labor Department said June 12. But core inflation, which strips out volatile gas and food prices, edged up a modest 0.2%, easing concerns that big jumps in energy and food costs were breaking through to more widespread inflation.

The nation’s trade deficit-what we import versus what we export-rose to 7.8% to $60.9 billion, the largest imbalance since March 2007, the Commerce Departmrnt said June 10. Driving the deficit as a $4.3 billion increse in crude oil imports, which jumped to a record $29.3 billion in April.

New claims for unemployment benefits rose to 384,000, an increase of 25,000 from the previous week, the Labor Department reported June 12.

More upbeat economic news came from the Mortgage Bankers Associatioin, which said that mortgage loan applications rose 10.9% from the previous week. Purchase applications increased 12.1%, while refi volume was up 8.4% from the previous week.

Economic news due this week includes reports on the Producer Price Index and housing starts on June 10

Economic data compiled  from government reports and news services , Bloomberg.com, msnbc.com, cnbc.com, cnn.money

Comparable retail sales at stores open a year or more (same-store sales) rose 3% in May, exceeding analysts’ 1% growth estimate, the UBS-International Council of Shopping Centers said June 5. Leading the way were upscale retailer Nordstrom Inc., up 10.9%, and discounters Costco Wholesale Corp., up 9% and Wal-Mart Stores Inc., up 3.9%.

The unemployment rate shot up to 5.5% in April, it’s highest level since October 2004, the Labor Department said on June 6. Although the 49,000 jobs cut from payrolls were fewer than the 58,000 job losses predicted by economists, Wall Street had forseen the unemployment rate rising to only 5.1%

Orders for manufactured goods increased 1.1% in April, suprising analysts who had forecast that overall orders would dip slightly in April, the Commerce Department reported June 3. Althougfh orders for autos and airplanes were weak, orders for mining and oil field equipment jumped 48.6% and orders for electrical equipment and appliances surged 28.1%

The service sector of the economy continues to expand, albeit at a modest pace. The Institute for Supply Management said on June 4 that its service sector index in May was 51.7, better than the reading of 50.3 economists had predicted . Any reading above 50 indicates the sector, which comprises roughly 80% of the total economy, is growing.

Although an improvement over March’s 0.6% decline, construction spending still fell by 0.4% in April, the Commerce Department said June 2. Private residential housing construction dropped 2.3% in April, the 26th consecutive monthly decline. However, spending on non-residential projects, such as hotels and motels, rose to 1.6%.

Long-term mortgage rates remianed virtually unchanged, according to Freddie Mac’s weekly survey ending June 5.

Economic news out this week includes reports on the trade balance on June 10 and the core consumer price index on June 13.

Economic data compiled from government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar.

Economic data compiled from Government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar

New home sales unexpectedly rose 3.3% in April, the first increase in six months the Commerce Department said May 27. As a result, the inventory of unsold new homes fell slightly to a 10.6 months supply versus the 11.1 months’ backlog recorded in March.

The Commerce Department further reported that the median price of a new home sold in April rose to $246,100, up 1.5% from April 2007. In a seperate report, however, the Standard & Poor’s/Case Shiller Index showed exsisting  home prices falling 14.1% in the first quarter of 2008, compared with a year earlier, the biggest year-over-year decline since the index began in 1988.

For the week ending May 29, interest rates on 30-year  fixed-rate mortgages rose to an 11 week high, Freddie Mac said.

More mixed economic news came from the industrial sector. Orders to U.S. factories for durable goods-those expected to last three or more years-dropped 0.5%, dragged down by big declines in demand for commercial aircraft and autos. However, excluding transportation, orders rose 2.5 % in April, the biggest gain in nine months. Orders for electrical equipment and appliances surged 27.8%, the biggest increase on record.

Another boost for the economy came on May 29 when the Commerce Department upwardly revised first-quarter gross domestic priduct of GDP-the total tally of the nation’s goods and services-from it’s previous estimate of 0.6% to an annual rate of 0.9%.

Finally, despite the government’s sending out billions of dollars in stimulus checks, consumer spending nudged up a small 0.2% in April, half of March’s increase, the Commerce Department said May 30.Personal income also edged up 0.2% in April, again half of March’s 0.4% increase. 

This week, watch out for the May enemployment report due out on June 6.

Economic data compiled from Government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar

As mortgage industry is going through changes and new regulations, new appraisals rules are being enacted as of Jan.01,2009. The amount of mortgage financed and appraisal is tightly coupled. New York Attorney General Andrew Cuomo crafted an agreement with Fannie Mae and Freddie Mac to ensure independent and reliable appraisal. Starting January the lenders will not be able to use the appraisers on their payroll or if they have interest in the appraisal company and they want to sell their mortgages to the Fannie Mae and Freddie Mac. Mortgage Brokers will not be able to order their own appraisal.  While the intent of Attorney General of New York is good one but in my opinion it will cause many more side effects like depressing the market or depriving the home owners of the fair market value.

The intent is that appraisers should be independent and without the influence of the lenders or mortgage brokers. It will be handled by an appraisal management company. it is not clear how these companies will be formed ? Or how many companies will emerge ? Most likely these companies are going to put a lot of emphasis on AVM - automated valuation model which is simply using computerized systems to come up with a value. AVM does not take into the account if the house is in poor condition or updated. It misses out many other criteria which only an appraiser on the site can determine. This may not give the fair market value to the home owner or on the other hand may not protect the lender by giving higher value than the fair market value. Currently mortgage broker can submit the same appraisal to many lenders to get the consumer the best rates, with the new regulation the mortgage broker may not be able to do so or at-least the guidelines are yet not clear. Like some other regulations or legislations it creates many more side effects and does not cure the problem. Like any industry there are some bad apples in this industry, but there are lots of appraisers who want to work with good mortgage brokers or vice versa.

My opinion is that any new legislation or regulation should protect the consumer but should not deprive them of the fair market value of their assetts. Until proper computer models and computer programs are generated for AVM, until the structure, role and methodology of apprisal management company is defined this regulation should not be enforced. After all it should help consumer and not hurt them.

1. Inspect the property thoroughly and repair as many items as possible.

2. Hire a good broker and appraiser to get the market analysis, ideas about improvements that would add to it’s saleability. Ask broker about the marketing plan.

3. Ask your broker to post all the inspections and disclosures on line before hitting the market.

4. Hire or consult staging company. You will be surprised that minor changes makes big impacts.

5. Maintain not only your front and backyard but also your neighbors. If neighbors are not maintaining it well, approach them politely and even offer your services.

Workers take a bow. According to the Labor Department, your productivity-the amount of output per hour of work-rose 2.2%, in the first quarter, better than the 1.5% increase that had been expected. When productivity increases, businesses can afford to pay workers higher wages out of the increased output without the risk of inflation.

Sales at many of the nation’s retailers also were better than expected in April, with Wal-Mart Stores Inc. and Costco Wholesale Corp. leading the way, Thomson Financial said May 8. In Thomson’s tally of same-store sales-or business at stores open at least a year-19 retailers beat estimates, while nine missed. Costco reported an 8% increase and Wal-Mart reported a 3.2% gain. Gap Inc., however, reported a 6% decline.

The U.S. service sector, which represents about 80% of U.S. economic activity and includes businesses such as banks, airlines, hotels, and restaurants, expanded in April to snap a three-month period of contraction. The Institute for Supply Management’s non-manufacturing index issued May 5 came in at 52.0 in April, up from 49.6 in March. Any reading above 50 indicates growth.

The number of newly laid-off workers seeking job benefits fell to 365,000, a decline of 18,000 from the previous week, the Labor Department said May 8. Nationwide, the total number of unemployed workers receiving benefits dipped to 3.02 million for the week ending April 24 but remained above the 3 million mark for the second consecutive week.

Economic news due out this week includes reports on consumer inflation on May 14 and housing starts on May 16. 

Economic data compiled from Government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar

The Commerce Department got the month off to a good start when it reported on May 1 that consumer spending in March was up 0.4%, double the increase economists had predicted. Consumer spending, which accounts for 70% of U.S.  economic activity, is vital to the nation’s long-term economic health.

Further economic stimulus came from the Federal Reserve, which announced on April 30 that it was pushing down the federal funds rate–the rate at which banks lend money to one another–to 2%, the lowest level since late 2004. The reduction marked the seventh rate cut by the central bank since it began easing credit conditions last September. On the heels of the Fed’s action, many commercial banks announced they were cutting their prime lending rate to 5%.

The Commerce Department also reported on April 30 that the gross domestic product–the sum of all goods and services produced in the United States–expanded at a 0.6%annual pace in the first quarter. The gain, which matched the rate of the previous three months, was better than forecast.

Job losses slowed in April, with the Labor Department reporting May 2 that employers shred 20,000 jobs from their payrolls, far fewer than the 75,000 cuts that economists were anticipating. The unemployment rate also fell from 5.1% in March to 5% in April, again suprising economists who had expected unemployment to climb to 5.2%.

Also on Friday, the Commerce Department reported that factory orders in March rose 1.4%, far better than the 0.2% rise analysts had forecast. The rebound followed a 0.9% dip in February and a 2.3% drop in January.

Economic news due out this week includes reports on workforce productivity on May 7 and the U.S. Trade balance on May 9.

Economic data compiled from Government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar