Debt Ceiling and Real Estate - Brandon Knapp of RPM Mortgage

After months of political grumbling back and forth, the Debt Ceiling was finally raised and the country took a step - albeit a small one - towards lowering our enormous budget deficit.

With the political stalemate behind us, it's time to focus on how the Debt Ceiling deal will impact Bonds and home loan rates.

First, shortly after the deal was announced, Fitch Ratings and Moody's both reaffirmed the United States' AAA rating, citing that the Debt Ceiling agreement virtually removes any threat of default. That was Bond friendly news and helped Bonds and home loan rates improve. But the ratings agencies did leave the door open for a future downgrade depending on how the debt and budget negotiations continue in the future. So the Debt Ceiling may be raised, but the issue of debt and credit ratings is far from over.

Beyond that, the deficit reduction program agreed to in the deal should help strengthen the value of US debt, because there will be less spending. At the same time, less government spending will also weigh on Gross Domestic Product (GDP). And just last month, we saw how weak the GDP already is when the 2nd Quarter GDP came in well below expectations and at the slowest growth rate in 2 years. Additionally, the 1st Quarter GDP was revised sharply lower than it was previously reported. Remember, a weak GDP would make Stocks LESS attractive and Bonds MORE attractive - as Bonds generally perform better during sluggish economic times.

Bottom line… be careful what you wish for. When rates moved sharply higher this past winter, it was due largely to the Fed's second round of Quantitative Easing (QE2). When that ended, the prevailing wisdom was that the only way rates could come back down to levels anywhere near where they were on the eve of QE2 was if the economy "endured more pain." That sure is what we are seeing of late as growing economic uncertainty, persistently high unemployment and rising consumer pessimism is helping Bonds move higher and trade within an earshot of the best levels - ever!

Though Bonds and home loan rates look very attractive right now, we can't be complacent and think rates will stay low or go even lower still. As fast as prices have moved higher, things can change in a heartbeat if the economy starts to see some good news.

And, although there isn't much, there is some good news out there. For example, the most recent reports for Housing Starts and Building Permits were both reported better than expected. While this is only one number and one number doesn't make a trend, this is a good figure, and I will be watching closely for follow through in future readings.

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Brandon Knapp's Market Update Jan 24, 2010

In This Issue...

Last Week in Review: The US Dollar has dropped. Find out why and what it could mean to home loan rates! Forecast for the Week: A full load of economic reports hits the markets. Read what they are and why they matter. View: How much can you deduct for driving? Discover what’s changed...and how you can benefit! Read Entire Article

Brandon Knapp's Market Update Jan 10, 2010

In This Issue

Last Week in Review: The labor market continues to improve, and while that’s good news for our economy, what does it mean for home loan rates? Forecast for the Week: Very impactful reports are in store for the week ahead - including a look at inflation, retail sales, and how American consumers are feeling these days. View: Breaking news... you won’t need to sweat the dreaded April 15th date this year. Find out why below. Read full story here

Brandon Knapp's Market Update 11/5/2010

Fed rate update and more


Read full story

Brandon Knapp's Market Update 10/18/2010

Last Week in Review: Quantitative Easing is heading our way, but when, why, what will it mean? Many questions remain...

Forecast for the Week: What kind of outlook will the economic reports of the week create?

View: 5 Facebook posts that put you at risk! Do you know what they are?

Click here for full update

Brandon Knapp's Market Update 10/12/10

• Jobs numbers
• Fed meeting results
• Texting while driving..no longer a worry..see why

See full report here

Brandon Knapp's Views You Can Use October 2010

• Unintended consequences and home loan rates
• 7 Ways to teach financial responsibility to children
• Q & A:  How much home can you afford?

Full Details Here

Brandon Knapp's Market update 9/27/10

Last Week in Review, Forecast for the Week, Mortgage Market Guide
Full Market Update Here

Brandon Knapp's Market update 9/20/10

Brandon's report talks about bonds and China this week.  Good stuff!

http://www.mmgweekly.com/w/index.html?SID=89e3b2c88ef35d68afff6abeb34bec4c

Brandon Knapp's Market Update 9/13/10

Here is a link to Brandon Knapp's weekly lending update from September 13th, 2010.

Labor Markets are the focus this week.

http://www.mmgweekly.com/w/index.html?SID=89e3b2c88ef35d68afff6abeb34bec4c

Brandon Knapp's Market update 9/3/10

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Provided to you Exclusively by Brandon Knapp


For the Month of September 2010 --- Vol. 5, Issue 9



Brandon Knapp
Branch Manager / RPM Mortgage Office: 408-583-3205

Fax: 408-404-5574Email: bknapp@rpm-mtg.com
Website: www.rpm-mtg.com/bknapp

What you don’t know CAN hurt you. Financial markets are complex systems with nuances that can impact your home loan and budget. This issue is dedicated to helping you make sense of some of those important – but often overlooked – factors. For instance, did you know the amount of money that you and other consumers spend can actually impact home loan rates? Or that bad economic news can be good for home loans rates? The articles below explain why…and what you need to know.


IN THIS ISSUE...

	Velocity and personal spending - Did you know that consumer spending can impact home loan rates? Here’s how! 7 factors - If you’re trying to decide whether you should move or remodel, check out these 7 important factors. Q&A: Why is bad news good? - Discover why bad economic news usually results in good home loan rates.

How Does "Personal Spending" Impact Home Loan Rates? At the end of August, the Commerce Department reported that Personal Spending and Personal  Incomes rose slightly in July, while the Personal Savings rate fell to 5.9% in July from 6.2% in June.  While the rise in spending and income is good news for consumers and the economy, many people  aren’t aware that those statistics can have an impact on home loan rates. So…why is all this significant and what does it have to do with home loan rates? It has to do with something called the “velocity of money.” Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent, and passes from one hand to another or one business to another. The speed at which this money passes between  parties is called the velocity of money. With the job market still very sluggish, consumers aren't spending  much money these days... and businesses are still reluctant to spend money or make investments in  their business. With present velocity at low levels, inflation remains subdued...however, once velocity  increases, the excess money in the system will cause inflation. And remember, inflation is the archenemy of Bonds and home loan rates – which means that even the scent of inflation can cause home loan rates to worsen. If you or anyone you know would like to learn more about taking advantage of historically low home loan rates, please don't hesitate to call or email. Or forward this newsletter on to anyone you think may benefit and I'd be happy to talk to them free of charge. Move or Remodel: 7 Factors to Consider 1. The size of your family has changed. The most common reason people move is because of the  size of their current home. Many young couples have purchased a cozy two- or three-bedroom,   1,000-square foot home that suits their situation perfectly. The home has a master bedroom, a guest  bedroom, and possibly a home office. A single living area with couches and an entertainment center  provides the couple with ample space for the two of them and their visitors. As they start a family, the  first child moves into the guest bedroom, and toys soon take over the living area. The perfect house  for two becomes too small for three or more. 2. You want better schools. Unless your children attend private school, the location of your home  usually dictates which schools your children will attend. This is great when it comes to building a sense  of community, as children can walk or bike to school together. Having a school nearby can also cut  down on travel time for dropping off and picking up your children. 3. Your commute is a killer. Many people choose to move because they have changed jobs. Be it out of state or in another community, most people will only commute so far. If you want to have a shorter commute, then moving may be your only answer. 4. You don't like remodeling. Remodeling is not for everyone. No matter how it’s accomplished, one thing is unavoidable: the inconvenience. It can be as little as not using your kitchen for a day while it is being painted or as much as moving out for six months while some major work is done. For some, any inconvenience is too much, so a move may be the way to go. 5. You don't like your neighborhood. Each neighborhood has its own characteristics. Some have big yards; some have small. Many have sidewalks and streetlights while others do not. Some  neighborhoods have kids playing on the street all day long and friendly neighbors stopping by to chat every day. In other neighborhoods, people keep to themselves and rarely wave as they drive by each other on the way to work. As much as we all would like to change some features of our neighborhood, many are out of our control. If your neighborhood doesn't meet your needs, a move may be the only solution. 6. Your home has a bad floor plan. If you don’t like the layout of your home, then moving could be the right solution. If you’re seeking a kitchen in front and a family room that faces south, but your home has the kitchen in back and the family room facing north, a remodel may be too expensive to be  practical. Due to lot size, building codes, or physical barriers, some homes may not lend themselves to remodeling the way you want. Building codes can limit the type and size of additions as well as their appearance. 7. Your yard leaves much to be desired. For many, the yard is an integral part of the house. A yard is land to call your own, whether it’s a place to plant flowers or vegetables, or an expanse of grass that you take pride in keeping green and manicured all summer long. The question is, how big of a yard do you want and is your current one adequate? If you’d like to explore the topic further, you may want to consider the  resource: Remodel or Move™. This independent organization was founded with the mission  of empowering consumers to make the best “remodel versus move” decision. The  organization’s website provides reference materials, evaluation tools, and no-nonsense  information. Q&A: Why is Bad News Good? QUESTION: Why is bad economic news typically good for mortgages…and vice versa? ANSWER: There's actually a pretty simple explanation for this seemingly strange phenomenon. But, you first need to understand a couple of important financial concepts: 1. Big money managers – who are always in search of higher returns – avoid holding onto cash. So  they invest in both Stocks and Bonds. 2. Home loan rates are actually based on the performance of Mortgage Backed Securities (MBS),  which are a type of Bond. When we put those two facts together, we begin to understand the relationship between bad economic  news and good home loan rates. Here’s why: Whenever the economy is on fire and there are good  economic reports along with positive economic news, investors tend to put more money into Stocks.  That’s because Stocks are more risky, but they generally offer higher returns. To do this, however,  investors must remove some of their money from less-risky Bonds. This decreased demand in Bonds  causes Bond prices to worsen, which causes home loan rates to rise. Inversely, when the economy is sluggish and economic reports are negative, money managers tend to  remove money from higher-risk Stocks and put it into less-risky Bonds. As the demand for Bonds  increases, Bond pricing improves and home loan rates decrease. The material contained in this newsletter has been prepared by an independent third-party provider. The material  provided is for informational and educational purposes only and should not be construed as investment, financial,  real estate and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee  it is not without errors. As your Trusted Advisor, I always want to make sure you are clear on all details of the home financing process. If you or  someone you know are interested in purchasing or refinancing a home, give me a call today! In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or  email: bknapp@rpm-mtg.com Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this  email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to the recipient or distributor a license to any content, features or materials in this email. You may not distribute, download, or save a copy of  any of the content except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Brandon Knapp's Market Update 8/23/10

Brandon Knapp Branch Manager RPM Mortgage Office: 408-583-3205 Fax: 408-404-5574 E-Mail: bknapp@rpm-mtg.com Website: www.rpm-mtg.com/bknapp

For the week of Aug 23, 2010 --- Vol. 8, Issue 34

"There is nothing wrong with change, if it is in the right direction." Winston Churchill. And certainly, seeing our economy improve is change in the right direction. But what steps will get us there... and how will those steps impact home loan rates. Here’s what you need to know. Last Tuesday, the government held a "Future of Housing Finance" conference to discuss changes needed in this area. Most participants agreed that government assistance for housing must be reduced but not eliminated. Bill Gross, from PIMCO and one of the panelists, called for a massive refinancing of certain mortgages backed by Fannie/Freddie/FHA, believing such a move would lift home prices 5% to 10% and provide a $50 Billion stimulus to the economy. I will be watching this situation closely for further developments. Home sales and the job market - two key aspects to our continued recovery - are also areas we need to see change in an improving direction. Last week, the NAHB Housing Market Index came in a bit worse than expectations and showed housing to be at a 17-month low. It can be argued that the tax credits actually hurt the housing market by not adding any sales, just pushing them up. This has now resulted in a void or softer period in the market, potentially wasting billions of dollars. Housing Starts and Building Permits were also reported lower than expected last week. Clearly, demand for housing has slowed over the past few months, due to the expiration of the Home Buyer Tax Credit and persistently high unemployment. Speaking of unemployment, awful is the only way to describe last week’s Initial Jobless Claims report. According to the report, 500,000 people filed to receive unemployment benefits for the first time, which was well higher than the lofty 475,000 expected and the highest reading since November 2009. In addition, between Continuing Claims and people receiving Emergency Unemployment Compensation or EUC, the combined total of people receiving unemployment benefits now equals 9.25 Million people. The bottom line is this: The labor market is the foundation of our economy. Job growth and confidence is the best and most sustainable way for our economy to recover. The present anti-business regulatory environment is pushing Initial Claims, a leading indicator on the health of the labor market, in the wrong direction. But home loan rates, meanwhile, continue to remain at historic low levels. Though keep in mind, inflation is the arch enemy of Bonds and home loan rates, which means it can cause both to worsen. Both the Producer Price Index (which measures inflation at the wholesale level) and the Consumer Price Index were recently reported hotter than expected. If rates do start to rise, they will likely do so quickly. If you or anyone you know would like to learn more about taking advantage of historically low home loan rates, please don’t hesitate to call or email. Or forward this newsletter on to anyone you think may benefit and I’d be happy to talk to them free of charge. WHEN YOU’RE BUYING A HOUSE, THE LAST THING YOU WANT IS AN UNSUCCESSFUL CLOSING. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW FOR SOME INFORMATION THAT WILL HELP ENSURE YOUR HOMEBUYING EXPERIENCE MOVES IN THE RIGHT DIRECTION.

Forecast for the Week:

More housing and job news follows this week, but will there be change in an improving direction? We’ll find out with Tuesday’s Existing Home Sales Report, Wednesday’s New Home Sales Report, and Thursday’s Initial and Continuing Jobless Claims Report. Also, on Wednesday we'll get a read on the health of the economy with the Durable Goods Report, which gives us an update on consumer and business buying behavior on big-ticket items that last for an extended period of time. Meanwhile, Friday will bring another read on the economy with the Gross Domestic Product Report, which is the broadest measure of economic activity.Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, last week’s weak economic news helped home loan rates hit record lows again, but volatility was rampant. I’ll be watching closely to see what this week brings. -----------------------Chart: Fannie Mae 3.5% Mortgage Bond (Friday, August 20, 2010)

The Mortgage Market Guide View

Credit Reports: One May Not Be Enough This summer, Fannie Mae instructed lenders that they should adopt a new policy that would include a second review of an applicant's credit report just prior to closing. Why? The answer is simple: the credit profile of a borrower may have changed between the time of the initial review of the credit report and the time of closing. How will this impact the home loan? The potential impact to a borrower who has utilized credit to make significant purchases after the initial credit report could include: A delay in closing Increase of closing costs and/or interest rate A decreased loan amount Denial of the loan That’s right, in the worst-case scenario, a change in credit could even result in a loan being denied - even after an original approval had been granted. What should homebuyers do (or not do)? In order to eliminate any possibility of potential problems before closing, anyone in the application process should use credit sparingly and make sure they adhere to the tips provided below by credit expert Linda Ferrari of Credit Resource Corp: Don't do anything that causes a red flag to be raised by the scoring system. Don't apply for new credit of any kind. Don't pay off collections or charge offs. Don't max out or over charge on your credit accounts. Don't consolidate debt onto one or two credit cards. This list is not comprehensive, but it does give you a peek into situations that could create issues and could also be contrary to some ideas you have read previously. --------------------------Economic Calendar for the Week of August 23-27, 2010 Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise. Economic Calendar for the Week of August 23 - August 27 Date ET Economic Report For Estimate Actual Prior Impact Tue. August 24 10:00 Existing Home Sales Jul 4.75M 5.37M Moderate Wed. August 25 08:30 Durable Goods Orders Jul 3.1% -1.2% Moderate Wed. August 25 10:00 New Home Sales Jul 330K 330K Moderate Wed. August 25 10:30 Crude Inventories 8/21 NA -0.818M Moderate Thu. August 26 08:30 Jobless Claims (Initial) 8/21 485K 500K Moderate Fri. August 27 08:30 Gross Domestic Product (GDP) Q2 1.4% 2.4% Moderate Fri. August 27 08:30 Chain Deflator Q2 1.8% 1.8% Moderate Fri. August 27 10:00 Consumer Sentiment Index (UoM) Aug 69.4 69.6 Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors. As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you. In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: bknapp@rpm-mtg.com If you prefer to send your removal request by mail the address is: Brandon Knapp RPM Mortgage 1901 S Bascom Ave Ste 1600 Campbell, CA 95008 Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email.   You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.