I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week’s survey may point you in the right direction.

The Bankrate.com survey is for conforming mortgages only. It is not specific to Cincinnati, nor does not apply to FHA mortgages, VA mortgages, jumbo mortgages, or super jumbo mortgages. For a personal rate offer, // contact me directly.

Here’s the group’s 30-day prediction for mortgage rates:

• 18% predict mortgage rates will increase
• 18% predict mortgage rates will decrease
• 64% predict mortgage rates will remain unchanged

I am bucking the trend, predicting that mortgage rates will decrease over the next 30 days.

My advice not be appropriate for your individual situation and I’m not always accurate besides. Either way, here’s what I told Bankrate.com:

“Demand for dollars-denominated bonds helps rates to ease lower.”

Now, there are a lot of reasons why mortgage rates change.  Economics, politics, trends — take your pick.  Each plays an important role. But of equal importance is the value of the U.S. dollar.

The U.S. dollar matters to mortgage rates because it’s the currency in which mortgage bond investors are repaid.  When the dollar loses value, so does the value of those repayments.  Therefore, mortgage-backed securities lose their luster and rates rise in order to entice investors back.

When the dollar gains, the chain reaction flips in reverse.  And, as a result, mortgage rates fall.

The dollar should gain in the coming weeks.  The U.S. economy appears to be recovering from recession — probably faster than our global peers.  As a result, whenever there’s a perceived risk in the global economy, global cash seems to flow to the U.S. markets. To investors, it’s the safest place to be.

This partly explains why stocks and bonds have moved in the same direction of late.  The same forces that are pushing stock markets higher are helping the U.S. dollar to gain, too.  It’s causing bond prices to rise and rates to fall.

That said, markets remain volatile and rates do, too.  The global economy is in flux and there are countless outside influences for which to account.

As a loan officer, I watch mortgage-backed securities and track rates on a real-time basis.  If you’re not working with a loan officer and want to work with me, I’m never too far from my phone or // my email so just reach out anytime. I’ll help you try to time a market bottom so you don’t overpay on your rate or your fees.

Or, you get more passive about it.  Watch me on Twitter: Briancav I post updates all day long

Brian Cavanaugh of Wells Fargo Home Mortgage just sent me an interesting email in regards to when to schedule your closing to take advantage of the $8000 tax credit:

The $8,000 First-Time Home Buyer Tax Credit expires November 30, 2009.  In order to claim the tax credit, the IRS requires that you’ve closed on or before that date.  December 1, 2009 is too late.

But that doesn’t mean that first-time home buyers should target November 30, 2009 as a closing date. In fact, there may not be a worse day in 2009 on which to try to close on a home.  The optimal time is during the week of November 16, 2009 and the earlier in the week, the better.

To understand why, let’s start with the fact the home sales volume is through the roof, and then we’ll look at a calendar.

New Home Sales data and Existing Home Sales data has been unexpectedly strong and first-time buyers account for nearly 1/3 of all transactions.  Furthermore, the Pending Home Sales reports tell us sales volume is still growing.

It’s reasonable to infer, therefore, with home prices still low and with mortgage rates still down, buyer interest will stay strong all the way through the November 30, 2009 deadline — especially as trade groups trumpet “The End Of The Incentive”. There will be a mini-panic as everyone tries to close in time to claim their $8,000.

This is when it starts to get messy.  Check out the calendar.

• November 30, 2009 is the Monday after Thanksgiving Weekend.
• November 28-29, 2009 is a weekend.  No closings on weekends.
• November 27, 2009 is the Friday after Thanksgiving — an unofficial holiday.
• November 26, 2009 is Thanksgiving — an actual holiday. No closings.
• November 25, 2009 is the day before Thanksgiving — a national “half-day”.

So, that backs up the November 30, 2009 first-time home buyer tax credit deadline by 6 days to November 24, 2009 — a Tuesday.

And I won’t tell you that closing on Tuesday, November 24, 2009 is a bad idea, but I’ve been in this business long enough to know that there’s always a chance for something to go wrong. And when it does, you’re going to want some sort of a cushion between the “the problem” and “the deadline”.

Maybe it will be a problem on your final walk-through, or with your mortgage loan documents.  But as the buyer of a home — the largest purchase you’ve made in your life to-date — the last thing you’re going to want is to feel pressured into signing your paperwork because of worries over an $8,000 tax credit.

Therefore, don’t mess.  Schedule your closing for the week of November 16, 2009, instead.  That way you’ll have plenty of time to work through whatever needs to be worked out in connection with your home and your home loan. With a closing set for the 16th, you’ll meet your tax credit deadline with plenty of time to spare.

That said, the clock is winding down.

If you haven’t started your home search yet or aren’t under contract, it’s seriously time to get cracking.  Purchase closings come 60-day default.  Sometimes, you can negotiate them down to 45 days or 30 days, but, for the most part, 60 days is the standard– especially if you’re buying a short sale.

Counting backwards from November 16, therefore, renders September 17, 2009 the last day to go under contract and be sure of collecting that $8,000 tax credit.

It’s a scant 24 days from now.

If you’re a first-time home buyer and just starting your research, I encourage you to call or // email me directly with your First-Time Home Buyer Tax Credit questions about how the program works.  The IRS has a straight-forward form  you can read but it may not be “personal” enough to address your particular needs.

Sometimes, you need the human element, though.

If there are any questions regarding this buyer please feel free to contact Brian Cavanaugh at (617) 771-5021.

How To Accept A Home Down Payment Gift From Family That Will Not Get Rejected In Underwriting

Over the past 2 two years, mortgage guidelines have tightened and one of the lasting impacts on home buyers is that it now takes a larger down payment to buy a home.

It’s as true for conventional home loans as it is for FHA ones — banks want to see more of home buyer’s own skin in the game

Unfortunately, not every buyer has the cash.

This is one reason why — anecdotally — the number of home buyers asking for “down payment gifts”  from family members is rising. With home prices down, mortgage rates low, and a generous first-time home buyer tax credit in place, there’s a lot of would-be homeowners that don’t want to miss out on the action.

However, if taking a gift of down payment is part of your upcoming home financing strategy, you need to know that there’s a right way and a wrong way to do it.  You can’t just deposit your parents’ money into a bank account.

Accepting cash for a down payment is a 3-step process.  Follow the steps to a tee, or expect an underwriter to disallow the gift as a source of down payment.

First, complete and sign an acceptable gift letter.  There are lots of variations on the “Down payment Gift Letter” but each follows the same basic format.

• Includes the amount of the gift
• Includes the subject property address
• Includes the relationship of the gifted to the giftee
• States that the gift is actually a gift and not a loan
• Signed and dated by all parties

If you don’t have a template gift letter on-hand,   send me an email and I’ll forward you the one I use for my clients.

Next, with the gift letter in place, the donor should to make an extra strong paper trail for the money being gifted.  This is one reason why certified checks are preferable to wire transfers.  Both are acceptable methods of gifting, but certified checks are easier to document and simpler to prove  — all it takes is a teller receipt.

Make sure the amount of the gift matches the amount specified on the gift letter.

And, lastly, when receiving the gift, the giftee should be careful to accept the gift as-is.  Deposit it with a live teller in a branch bank and make sure the deposit is not commingled.  If the gift is for $10,000, for example, make a $10,000 deposit — nothing more, nothing less.  Don’t add a random $100 check to the deposit, in other words.

Follow these 3 steps, though, and everything should be fine.

Meanwhile, there might be legal and tax liabilities when gifting funds between family members.  If you’re unsure about how donating or receiving a gift might impact you, be sure to talk with your attorney and/or accountant.

To reach Brian Cavanaugh feel free to email him at Brian.Cavanaugh@wellsfargo.com or on his cell at (617) 771-5021

Conforming Jumbo’s are actually going to be lowered from $523,750 to $465,750 which is expected to be announced Monday.

This information is provided by our good friend, Brian Cavanaugh, over at JPMorgan Chase.  Thanks Brian!

The biggest report next week will be Friday’s important Employment data. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month, since the health of the labor market is perhaps the single biggest factor in the performance of the economy.

Earlier in the week, the ISM manufacturing index and Construction Spending will be released on Monday. ISM Services is scheduled for Wednesday, and Productivity will come out on Thursday. Finally, Pending Home Sales, a leading indicator for the housing market, will be released on Friday.

Regards, Brian C.

Brian M. Cavanaugh

Senior Loan Officer

JPMorganChase

260 Franklin St., Suite 1901

Boston, MA. 02110

617.235.6714 Office

617.771.5021 Cell

866.811.8568 Fax

www.BrianCavanaugh.com