Optimism Creeps Into The Market
It is quite striking when you compare one week to the next in the financial markets. The 10 days before Thanksgiving were brutal. Stocks were diving, Europe was tipping into chaos and it looked like we were surely heading into another slowdown next quarter. We come back from the Thanksgiving Holiday and we are all brimming with optimism. What happened? Well, first there were very strong Black Friday and Cyber Monday sales reported. Last week we spoke about the importance of the Holiday shopping season with regard to the health of the economy. Next, the world's central banks decided to step up and provide more support for Europe, making it easier for cash-strapped nations to raise capital.
Finally, we had some positive economic reports released. This past week reports were released on consumer confidence, construction spending and manufacturing and all of these reports exceeded expectations. On top of these reports, the all-important employment releases were also positive. Though many will discount the significant drop in the unemployment rate from 9.0% to 8.6% on temporary factors, there is no doubt about the fact that the number is moving in the right direction from a peak of over 10.0% and the numbers added to payrolls last month were not spectacular, but solid. Bottom line, the markets liked what they saw and the stock market rebounded strongly. This will also help boost confidence and confidence is exactly what we need right now. Of course, it would be nice if we had at least a few months of this good news instead of the wild swings back and forth. The question will be -- how long will these record low rates hold if the good news continues?
On November 18, 2011, the President signed into lawÂ the Consolidated and Further Continuing Appropriations Act 2012.Â This lawÂ re-establishes the higherÂ FHA loan limits in high-cost areas which expiredÂ October 1 of this year.Â Previously, theÂ Economic Stimulus Act of 2008 set higher limits for conforming and FHA loans in high cost areas because of limited availability of jumbo mortgages in the wake of the financial crisis. Why is this important toÂ present and prospective homeowners? In higher cost areas, while jumbo mortgages are now available again, they are not available with the low rates and lowÂ down payment requirements of FHA mortgages.Â For example, many jumbo programs require a 20%Â down paymentÂ and FHA only requires a 3.5% down payment. That is quite a difference for those whose mortgages are over theÂ present conforming high-costÂ limit of $625,500.Â The extended FHA high-cost limitsÂ go up toÂ $729,750. FHA is available for both purchasing a home and refinancing your present home. You must live in the property you purchase if you are using FHA.Â If you are thinking about purchasing a homeÂ or refinancing and you want to know if the new extended FHA loan limits could help you, please contact us.
Ultra-low interest rates mixed with stabilizing home prices continued to push housing affordability in the third quarter near its highest levels in more than two decades, according to the latest National Association of Home Builders Housing Opportunity Index.Â For the third quarter, 72.9 percent of all homes sold were affordable to families earning the national median income of $64,200, according to the index. This marks the 11th consecutive quarter that the affordability measure was above 70 percent; prior to this it rarely was above 60 percent.Â 'With interest rates at historically low levels and markets across the country beginning to improve, home ownership is within reach of more households than it has been for nearly two decades,' Bob Nielsen, chairman of the National Association of Home Builders, said in a statement.Â Source: National Association of Home Builders
There are several tax credits and deductions set to expire at the end of the year, and given the federal deficit problem, there's a good chance they won't be extended. If you want to take advantage of them, you need to act before Jan. 1, 2012. Here are a few that affect homeowners...
- Mortgage insurance premium deduction. If you itemize deductions, you may deduct the premiums you pay for mortgage insurance, just like you do mortgage interest. However, this deduction is phased out if your income exceeds certain levels. To qualify for the full deduction, a couple or a single taxpayer must have an adjusted gross income of $100,000 or less. The deduction is phased out completely if AGI exceeds $109,000. This deduction, which was first enacted for 2007, is scheduled to expire at the end of 2011. Thus, your payments are deductible only if you pay them during 2011; a payment after 2011 is not deductible.
- Home energy credit.Â First, any homeowner may qualify for an energy credit of up to $500. You can qualify for the credit if you purchase during 2011 solar panels to generate electricity or for water heating, or install wind energy equipment, a geothermal heat pump, or certain types of fuel cells to generate electricity. The credit is up to 30 percent of the amount you spend, up to the $500 limit. This credit is not available for purchases in 2012.Source: Inman News
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Thank you ,Â
Bethany J. Levin
Â Â Â Â Â
NorthPoint Mortgage, IncÂ
PHONE 401-465-9003 E-FAX 401-633-6060
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Articles and commentary are provided for general information only and should not be relied on as legal or financial advice. Opinions expressed herein do not necessarily reflect the opinions ofÂ NorthPointÂ Mortgage.