Consumer confidence at the end of March reached the second-highest level in four years.

Lower interest rates on mortgages and credit cards were one reason for the more positive view. According to a USA Today analysis, American households paid an average of $8,731 for mortgage interest in 2007. For 2011, the average interest was $5,633.

Low interest rates mean more cash in your pocket.

Three-fourths of the interest savings were from falling interest rates, the rest were from debt reduction.

For the three-week period ending on March 25, The Bloomberg Consumer Comfort Index showed more than 30 percent of households said they had a favorable view of the buying climate. It was the longest stretch since early 2008.

The economic gain for borrowers is greater than other stimulus efforts or even high gas prices. A cut in the Social Security payroll tax, for example, saves households an average of about $70 a month.

Job and income growth are providing consumers with the means to withstand higher fuel costs and are the basis for sales of cars and other expensive items. Economists at the National Automobile Association say even if people aren’t paying attention to their falling interest rates, the money builds up in their checking accounts and especially benefits big-ticket items like cars.

The favorable reduction in household debt shows that many responsible Americans are using the extra cash to pay down credit card balances, which is always a wise move.

Consumer spending is a big factor in U.S. economic growth, so if you need a car or a fridge and can afford it, you’ll perk the economy if you go ahead and buy it.

Everyone wonders, “Is it worth the money to remodel my home?” Overall, the answer is, “Probably.” But you should not expect to fully recover the amount of your investment.

In 2010, the National Association of Realtors said you can expect between 65 percent and 75 percent back on the investment dollar. During the real estate boom, you could get 80 percent to 90 percent back when selling. As property values grow, percentages will rise.

1. Home maintenance and repair projects: Do these first. If needed, replace or upgrade roofing, exterior paint, some windows, the furnace, and electrical amperage capacity (200 amp is best). An independent home inspector will be looking objectively at your home’s condition if you decide to sell.

2. Curb appeal projects: They are typically lower cost and create emotional appeal and a high ROI. The positive impact of a freshly edged, lush green lawn is significant. A pop of colorful annuals and ground-cover around trees draws attention from the road. A freshly painted front door is inviting, and shiny clean windows are a must.

3. Neighborhood norm projects: It’s remodeling that brings your home up to the level of others in the area with features buyers expect your home to have. If your neighborhood is mostly three bedroom homes with a full bath and three-quarter bath with a shower, and you have a three bedroom with a half bath, finding a way to add a shower will more than pay for itself.

4. Kitchen counter upgrades can be had for less by installing attractive counters that have man-made materials rather than granite. Some are made by blending acrylic polymers and stone-derived materials.

If you’ve been thinking about buying a home or rental property, experts at bankrate.com say low prices combined with low interest rates make this a good time to do it.

As one real-estate specialist puts it, “When money is cheap to borrow and houses are cheap to buy, it’s absolutely the best time to invest.”

While the timing is right, these tips can help investors take advantage of what might be the opportunity of a lifetime, say Bankrate advisors.

• Find a rental property in your area. Your real estate agent can help identify good properties, will work with you and share investment knowledge. Or, if you have the time and inclination, you can search foreclosure listings, read the newspaper ads, walk or drive through neighborhoods, and seek recommendations from friends.
• Look for the right location. Properties in highly populated areas can draw from a larger pool of potential renters. Renters are generally looking for properties with multiple bedrooms and bathrooms that are located in low crime areas. They want to feel safe and send their kids to good schools.
• At MSN Money, they ask, “Why buy a rental?” Their answer: “To get richer.” In today’s market, you may be able to buy a property for less than its actual value. Over time, you will realize most or all of that value.
• In the meantime, you can generate a reliable cash flow from the property.
• Because of depreciation and other deductions, you won’t pay federal or state tax on the income.
• Some prospective investors worry about the work involved in owning a rental house or duplex. You won’t have to worry about it if you hire a property manager to do the job for you. You’ll still have income.

This week brings us the release of five pieces of relevant economic news in addition to the minutes from the most recent FOMC meeting. Two of the economic reports are considered to be highly important to the markets and mortgage rates, while the others carry enough significance to influence mortgage rates if they show a wide variance from forecasts.

The first important piece of data this week is April’s Retail Sales, which will be released at 8:30 AM ET Tuesday. It is an extremely important report for the financial markets since it measures consumer spending. Consumer spending makes up over two-thirds of the U.S. economy, so this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.2% increase in sales from March to April.

A weaker than expected level of sales should push bond prices higher and mortgage rates lower Tuesday morning as it would signal that economic activity may not be as strong as thought. However, a larger increase could fuel fears of economic growth that would lead to stock buying and bond selling that would push mortgage rates higher.

April’s Consumer Price Index (CPI) will also be posted at 8:30 AM ET Tuesday. It is similar to last week’s PPI report, but measures inflationary pressures at the more important consumer level of the economy. These results will be watched closely and could lead to significant volatility in the bond market and mortgage pricing if they show any surprises. Current forecasts are calling for no change in the overall index and a 0.2% rise in the core data reading. The core data is the more important of the two readings because it excludes more volatile food and energy prices, giving analysts a more stable and reliable measurement of inflation.

Wednesday has three reports scheduled, starting with April’s Housing Starts at 8:30 AM ET. This data measures housing sector strength and mortgage credit demand by tracking newly issued permits and actual starts of new home construction. It is expected to show an increase in new starts from March’s readings. Since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.

The second report of the day is April’s Industrial Production at 9:15 AM ET. It measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.5% increase in production, indicating that manufacturing activity is growing. A smaller than expected increase in output would be good news for the bond market and mortgage rates because it would indicate that the manufacturing sector is not as strong as thought. This report is just a bit more important to the markets as the earlier housing report, so they both will likely need to show unexpected strength or weakness for them to cause movement in mortgage rates.

Wednesday’s third release is the minutes of the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy and economic growth. The goal is to form opinions about the Fed being able to wait until late 2014 to make a move to either boost economic activity or slow growth to ease inflation concerns. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading Wednesday.

The last data of the week comes late Thursday morning with the release of April’s Leading Economic Indicators (LEI). This Conference Board report attempts to measure economic activity over the next three to six months. It is expected to show a 0.2% increase from March’s reading, meaning that economic activity is likely to strengthen slightly over the next few months. A decline would be good news for the bond market and mortgage rates, while an increase could cause mortgage rates to inch higher Thursday.

Overall, it looks like we may see the most activity Tuesday with the two most important reports of the week scheduled. Wednesday could also be active while Friday is the best candidate for calmest day unless something unexpected happens. However, sizable gains or losses in the major stock indexes could influence bonds and mortgage rates more than a good part of this week’s economic data can. Therefore, please maintain contact with your mortgage professional if still floating an interest rate.

A recent Inman News article explains how mistakes in public records can hurt sellers without due diligence. While paperwork isn’t the most glamorous part of selling a home, the article is clear about the dangers of not knowing the legal usable square footage of your home as defined by the public record.

Buyers want to know the actual square footage, not just what is reported by the seller. If the numbers don’t match up, it could cause a problem.

For example, the article hypothesizes that “if the sellers say their house has 3,000 square feet of living space, but the public record reports only 2,300 square feet, the buyers expect an explanation for the discrepancy.”

Many appraisers are now only taking legal public record square footage into account when making their evaluations of a home’s worth.

It would be wise to check that the record on your home is correct, and make adjustments to it if not to prevent any transactions from falling apart over this detail. As the article points out, it can take months for changes to show up in the public record, so it is best to start fixing any mistakes early on.

Read the Inman News article here. Do you know what the public record says about your home?

photo credit: laura padgett

There are only three pieces of relevant economic data scheduled for release this week that may affect mortgage rates, in addition to two important Treasury auctions. The two most important reports will be posted Friday, meaning the markets will have to rely on factors other than economic news for direction most of the week.

There is no relevant economic data due until Thursday, so expect the stock markets to be a big influence on bond trading and mortgage rates until then.

The Treasury will hold a 10-year Note sale Wednesday and a 30-year Bond sale Thursday. Results of the auctions will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sale, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing those afternoons.

March’s Goods and Services Trade Balance report will be released early Thursday morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is expected to show a $49.9 billion trade deficit, but it is the least important of this week’s data and likely will have little influence on Thursday’s mortgage rates.

Friday has the remaining two reports. April’s Producer Price Index (PPI) is the first at 8:30 AM ET. It helps us measure inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, indicating inflation is not a concern at the producer level, we should see the bond market rally. The overall index is expected to show no change, while the core data that excludes more volatile food and energy prices has been forecasted to rise 0.2%. A decline in the core data would be ideal for mortgage shoppers because inflation is the number one nemesis for long-term securities such as mortgage-related bonds.

The last report of the week is May’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment. This index measures consumer willingness to spend, which relates to consumer spending. If consumers are more confident of their own financial situations, they are more apt to make large purchases in the near future. This report usually has a moderate impact on the financial markets though, because it is not exactly factual data. It is expected to show a reading of 76.2, which would be a small decline from last month’s final reading. If it shows a large decline in consumer confidence, bond prices could rise and mortgage rates would move slightly lower because waning confidence means consumers are less apt to make a large purchase in the near future. That is assuming the PPI does not give us a significant surprise though. The PPI is much more important to the bond market than the sentiment index is, so look for it to be the biggest influence on Friday’s mortgage pricing.

Overall, it likely will be a moderately active week for mortgage rates. Besides the week’s economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with the PPI report on the agenda, but Wednesday’s 10-year Note auction could also heavily sway bond trading. It appears we will likely see the most movement in mortgage rates the latter part of the week unless the stock markets post sizable gains or losses the first part.

With the Spring home sales season underway, many buyers are surprised to find themselves in bidding wars. Multiple offers on homes and bidding wars are becoming commonplace, due specifically to a supply shortage.

These bidding wars often involve multiple offers over asking price, with inspection waivers and other enticements for sellers. One home in Danville, California recently sold after just four days on the market at $50,000 over asking price, much to the surprise of the sellers.

According to the Wall Street Journal, “the bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump.”

With an extremely low inventory, buyers and Realtors are frustrated by the level of high competition in the market. To give yourself an edge, take a look at our post about Four Ways to Avoid Getting Outbid.

There are five economic reports scheduled for release this week that are relevant to mortgage pricing, but two of them are considered to be highly important to the financial and mortgage markets. In addition, there are several public speaking engagements by different regional Federal Reserve Presidents this week that may influence the markets.

However, I suspect that the economic reports and significant movement in stocks will be the biggest factors in whether mortgage rates move higher or lower this week.

March’s Personal Income & Outlays is the first of the economic releases, coming early tomorrow morning. It helps us measure consumers’ ability to spend and current spending habits, which is important to the mortgage market due to the influence that consumer spending-related data has on the financial markets. If a consumer’s income is rising, they are more likely to make additional purchases in the near future, fueling economic growth. This raises inflation concerns and has a negative impact on the bond market and mortgage rates. Current forecasts are calling for a 0.3% increase in the income reading and a 0.4% rise in spending. If we see smaller than expected readings, the bond market should open higher tomorrow morning, making an improvement to mortgage rates a good possibility.

The Institute for Supply Management (ISM) will post their manufacturing index for April late Tuesday morning. This is one of the first important economic reports released each month and gives us an indication of manufacturer sentiment. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. This points toward more manufacturing activity and could hurt bond prices, pushing mortgage rates higher. Analysts are expecting to see a reading of 53.0, which would be a slight decline from March’s level of sentiment. The lower the reading, the better the news for bonds and mortgage rates.

March’s Factory Orders data is Wednesday’s only relatively important data. It will be released at 10:00 AM ET, giving us a measure of manufacturing sector strength. It is similar to last week’s Durable Goods Orders, except this report includes non-durable goods such as food and clothing. Generally, the market is more concerned with the durable goods orders like refrigerators and electronics than items such as cigarettes and toothpaste. This is why the Durable Goods report, usually has more of an impact on the financial markets than the Factory Orders report does. Still, a noticeably larger decline than the 1.8% that is expected could push mortgage rates slightly lower. But, an unexpected increase in new orders could lead to slightly higher mortgage pricing Wednesday.

The Labor Department will release its 1st Quarter Productivity and Costs data early Thursday morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rapidly rising, the bond market should react favorably. However, a larger decrease than what is forecasted could cause bond prices to drop and mortgage rates to rise Thursday morning. It is expected to show a 0.4% decline in productivity.

Friday brings us the release of the almighty monthly Employment report, giving us April’s employment statistics. This is where we may see a huge rally or major sell-off in the bond market and potentially large changes in mortgage rates. The ideal situation for the bond and mortgage markets would be an increase in the unemployment rate and a much smaller number of payrolls added to the economy during the month than was expected.

Just how much of an improvement or worsening in rates depends on how much variance there is between forecasts and actual readings. This could turn out to be a wonderful day in the mortgage market, but it also carries risks of seeing mortgage rates move higher if the Labor Department posts stronger than expected readings. Current forecasts are calling for the unemployment rate to remain at 8.2% and that approximately 162,000 jobs were added during the month.

Overall, I believe Friday will be the most important day of the week with the employment data being posted. It can easily erase the week’s accumulated gains or losses in mortgage rates if it shows any surprises. We may actually see a noticeable change in rates Tuesday also if the ISM index shows favorable or unfavorable results. The middle part of the week will likely be the calmest, but I still suggest proceeding cautiously if still floating an interest rate. This would be a good week to maintain contact with your mortgage professional if you have not locked a rate yet.

When the stress of a possible foreclosure rises, it is important to remember that there are many resources out there to help avoid it. The programs and agencies below all specialize in helping people avoid foreclosure on their homes:

U.S. Department of Housing and Urban Development (HUD)
800-569-4287
http://www.hud.gov/local/ca/homeownership/foreclosure.cfm

HUD Avoidance Counseling
http://www.hud.gov/offices/hsg/sfh/hcc/fc/

Making Home Affordable Program
888-995-HOPE
http://www.makinghomeaffordable.org/

Housing California
916-447-0503
http://www.housingca.org/nr/resource/foreclosure_resources/

State of California – Consumer Home Mortgage Information
http://yourhome.ca.gov/

Fannie Mae Resource Center
800-732-6643
http://www.fanniemae.com/homeowners/index.html

Project Sentinel – Redwood City counseling agency
(HUD Approved Agency)
888.331.3332
http://www.housing.org

Neighborhood Counseling Services – Silicon Valley
(HUD Approved Agency)
408-279-2600
http://www.nhssv.org/foreclosure-counseling.htm

Neighbor Works America
202-220-2300
http://www.nw.org/network/foreclosure/default.asp

National Foreclosure Mitigation Counseling
202-220-6314
nfmc@nw.org

The important thing to remember is that foreclosure isn’t always inevitable, and there are many programs and agencies ready to help. Share these resources if someone you know is going through a possible foreclosure on their home.

Buying and selling a home and moving is one of the most stressful processes on the human psyche. It is important that while going through the real estate process, you find time to take care of yourself.

Just like on an airplane, you have to put an oxygen mask on yourself before helping anyone else. This means that in order to be able to take care of things and other people, it is important that you make sure you take care of yourself first.

Savor time taking care of yourself to reduce the stress of moving.

Try setting aside relaxation time just for yourself each day, and do something you enjoy, despite the hectic and stressful nature of moving.

Reading a good book, spending time outside, taking a long bath, getting a massage – things like this will help you reduce your stress level immensely. With less real estate stress, handling the details will be easier.