Author Archives: Jeff Baxter Mortgage Team

About Jeff Baxter Mortgage Team

I've been a banker, marketer, and business owner for over 30 years. As a mortgage banker, I work in all the beach markets in southern Delaware and have been a consistent, “go to” lending partner for hundreds of real estate professionals. Over 1,900 followers on Twitter and fans of my Facebook Page: Jeff Baxter – Mortgage Banking rely on me for timely updates on mortgage news, financial markets, loan guidelines, and mortgage interest rates. Whether you follow me online, subscribe to my blog – A View From The Beach – or get my weekly email newsletters, you’ll find that I'm exactly what a Google search says I am – Delaware’s Leading Mortgage Banker

Cat and Mouse Game

A View from the Beach

June 6, 2017 –


For many years during and after the recession, the monthly jobs report was important to gauge the strength of the recovery. However, during the past two years, the release of the report has taken on a new meaning. Now we are not only measuring the strength of the economy, but also tying that information directly to actions by the Federal Reserve Board’s Open Market Committee. If we added 250,000 jobs in a particular month five years ago, that was good news. But we did not have to worry about the Fed raising interest rates as a result of that information. Today, a strong report can lead us to direct action by the Fed.

And so it is with the report which came out on Friday. The increase of jobs of 138,000 and the revision of last month’s data was seen as weakness. However, the unemployment rate moved to 4.1%, another post-recession low, and monthly wage growth came in at forecast. The question at this point is — are we approaching full employment, which means we are also experiencing a shortage of labor? This information, taken together with the previous month’s report, tells us that there is still a decent chance that the Fed will act when they meet next week, but slightly less of a chance than before the report was released.

The meeting will also be accompanied by the release of economic projections which will give us a gauge of where the Fed thinks that the economy is heading in the next several months. Keep in mind that the Fed will be considering other information which measure the strength of the economy. For example, on Tuesday last week, measures of personal income and spending for April came in with moderate strength following weak readings in March. Until the Fed meets next week, we can’t say exactly how they will react, but certainly the data we saw last week give us some important clues.

The Markets. Rates were stable last week, remaining at their lowest level of the year. For the week ending June 1, Freddie Mac announced that 30-year fixed rates fell one tick to 3.94% from 3.95% the week before. The average for 15-year loans remained at 3.19%, and the average for five-year adjustables moved up to 3.11%. A year ago, 30-year fixed rates averaged 3.66%. Attributed to Sean Becketti, chief economist, Freddie Mac — “In a short week following Memorial Day, the 10-year Treasury yield fell 4 basis points. The rate on 30-year fixed loans remained relatively flat, falling 1 basis point to 3.94 percent and once again hitting a new 2017 low.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes. 
Current Indices For Adjustable Rate Mortgages
June 2, 2017
Daily Value Monthly Value
June 1 April
6-month Treasury Security  1.07%  0.95%
1-year Treasury Security  1.16%  1.04%
3-year Treasury Security  1.45%  1.44%
5-year Treasury Security  1.76%  1.82%
10-year Treasury Security  2.21%  2.30%
12-month LIBOR  1.780% (Apr)
12-month MTA  0.732% (Apr)
11th District Cost of Funds  0.645% (Apr)
Prime Rate  4.00% (Apr)
  The pace of young adults leaving their parents’ homes is accelerating significantly, Fannie Mae’s Economic and Strategic Research Group notes in a new analysis. Young adults in their mid- to late 20s or early 30s living with their parents fell between 2013 and 2015—a period known as the economic recovery—much more so than between 2010 and 2012, when the economy and housing market were still recovering from the Great Recession, researchers note. Young adults aged 24 to 25 in 2013 and 26 to 27 in 2015 residing with their parents dropped by 7.6 percentage points. On the other hand, those who passed through that same age range between 2010 and 2012 saw a decline of only 5.4 percentage points, researchers note. “Stronger income growth and an accelerated rate of marriage are likely two primary reasons why millennials are starting to leave their parents’ homes at a faster pace,” researchers note. Millennials in their 20s or early 30s saw their income, adjusted for inflation, grow by at least 23 percent between 2013 and 2015 when compared to 2010 and 2012. Also, millennials in their late 20s and early 30s between 2013 and 2015 were getting married at a markedly faster rate than their predecessors did in that same age range during the recession and the recovery thereafter, Fannie Mae’s report notes. “Millennials’ accelerated rate of departure from their parents’ homes bodes well for housing demand,” Fannie Mae’s Economic and Strategic Research Group notes in the report. “Cohort analysis shows that the increased pace of leaving home has been accompanied by accelerated young-adult household formation.” Source: Fannie Mae Housing Insights


Almost half of young American home buyers are opting to live in suburbs compared to 33 per cent choosing an urban lifestyle and 20 per cent living in rural areas. Research from Zillow shows that millennials made up 42 per cent of homebuyers in 2016, making them the single largest generational group, and most of them were first time buyers. They are also loyal to their city with 64 per cent remaining in the same city when they move; just 7 per cent moved state in 2016. Starter homes are less attractive for today’s young buyers; they want similar homes to those that older generations buy and will pay a median $217,000 for a 1,800 square foot house. “Millennials have delayed home buying more than earlier generations, but don’t underestimate their impact on the housing market now that they’re buying,” said Jeremy Wacksman, Zillow Group chief marketing officer. “As members of this huge generation start moving into the next stage of life, expect the homeownership rate to tick up and suburbs to change to suit their urban tastes.” Source: Zillow

There was a 12% increase in business activity in 2016 among members of the National Association of Realtors® but there is disparity in their finances. The association’s latest Member Profile report shows that a typical member saw gross income increase, with a median 8% rise. They also saw the highest number of transactions in recent years. Transactions hit an average 12 per agent despite the pressure of tight inventories; that’s the highest since 2014 when the average per agent was 11. Sales volume grew to a median $1.9 million, up $100,000 from the previous year and median income was up to $42,500 in 2016 from $39,200 in 2015. Gross income for 2016 was a median $111,400, up from $98,300 in 2015. However, the figures show that 24% of NAR members made less than $10k while another 24% made more than $100,000. “The return of pre-recession market levels and rising home sales and prices have led to increased business activity among Realtors. It is a highly entrepreneurial business, with some members earning six-figure incomes while others were barely scratching out less than $10,000,” said NAR chief economist Lawrence Yun. Experience makes a big difference for typical real estate agents. The NAR data shows that those who make the most (median $78,850 in 2016) had been in business for at least 16 years. Those who made the least ($8,930 median) had been in business for less than 2 years. There continues to be a steady stream of new entrants to the industry with those with less than 2 years making up 28% of NAR members in 2016 while 20% of members had less than 1 year of experience. Meanwhile, those aged 60 or over made up 30% of NAR members and the median age of a Realtor was 53. “It has become evident over the last few years that individuals are realizing the many benefits and business opportunities that working in real estate provides,” said NAR President William E. Brown. Source: NAR



Protect Your Home

Fifty-six percent of consumers recently surveyed believe that a standard homeowner’s policy covers flood damage. But they’re mistaken, and their assumption could be a costly mistake. The survey by insuranceQuotes of about 1,000 consumers shows a lot of misunderstandings when it comes to home insurance and what’s covered and what’s not. “Being misinformed about your home policy can be an extremely expensive mistake—especially when a few inches of water in a 1,000 square-foot home can easily cost over $10,000 in repairs,” says Laura Adams, senior insurance analyst at insuranceQuotes. “There are a number of widespread myths ranging from coverage for dog bites to items stolen from your car that frequently trip up policyholders.” Consumers tend to overestimate the amount of coverage they have when it comes to flooding protection, according to the study.

Further, 81 percent of survey respondents knew that valuables stolen from their home were covered under most standard homeowner’s policies, yet only 28 percent knew that renter’s insurance would cover valuables stolen from their cars. “It’s critical for consumers to thoroughly explore their options and really understand the protections that are included or excluded with a standard renter’s or home insurance policy,” says Adams. “Don’t wait until right before a big storm is headed your way to get coverage because there may be a waiting period.”

Source: REALTOR® Magazine


Summer is Here

A View from the Beach

May 30, 2017 –


It is hard to believe that we have already celebrated Memorial Day in 2017. Doesn’t it seem that this year is going particularly fast? On Memorial Day, we remembered those who died in service to our country, a tradition that goes back as far as the Civil War and was originally known as Decoration Day. While there are ceremonies and parades going on across our country, the average American is also participating in Memorial Day picnics because good weather has finally arrived throughout the country.

Yes, the timing of Memorial Day is also the unofficial start of the summer. The kids are heading into their last weeks of school, vacations are starting and many people are moving because of the homes they have purchased during the spring homebuying season. This means that Americans are also meeting their new neighbors and becoming part of different communities — a very joyous occasion.

While we all enjoy the picnics and new homes, we should not forget the meaning of Memorial Day and its roots which came from a time when our Nation was literally torn apart. We mention this because today again our country is divided, and while differences of opinions are part of what makes our Democracy great, we hope that our divides heal over time because the more energy we expend focused upon conflicts, the less we can focus upon progress. Speaking of progress, we may take off for Memorial Day weekend, but the economy does not. We have another reading on our employment situation coming up this week — always an interesting time for the markets.


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Don’t Give Up on Internet Leads

Now, I’m not talking about the leads you get from Zillow or lead-generation websites.

Internet marketers will tell you that when you buy leads, be prepared to call them within 3 minutes (yes, minutes) of getting the lead. And, most of the time, those leads are either poor leads or the information is “sold” multiple times to other real estate agents.

I’m talking about self-generated leads. Leads from your website. An unsolicited email. A Google search by the client. Phone calls.

The beauty of self-generated leads is:

  • They are contacting you because they really don’t have a connection with another real estate agent.
  • If you can convey that you are “the expert” and you can build trust right away, they will be loyal to you.
  • Rarely do you have an argument about commission rates.
  • They have usually researched info about you ahead of time and that’s why they decided to contact you.
  • Consider it a long-term lead and keep in touch on a regular basis
  • They are not always 6 to 12 to 18 months out from buying or selling

When they contact you by email, your contact form from your website, a phone call — interview them!

In addition to the normal questions regarding the type of property, the dollar amount, if they need a mortgage, have they been pre-approved, ask them these questions:

  • Why did you choose to contact me?
  • What type of service do you expect from a real estate agent?
  • What type of information are you “specifically” looking for?

Set up your database. Don’t ask them how often they would like you to keep in touch with them. TELL THEM how often they can expect to hear from you.

And most importantly, call or email them when you say you are going to!

Why There Is a Shortage of Real Estate Appraisers

Their numbers are dwindling.

It takes a longer time period to get one done.

The costs have increased while appraiser compensation has decreased.

So, what’s happening and why is there a shortage of appraisers?

The National Association of Realtors recently took a survey and this is what was reported:

“Among the contracts that had a delay to settlement, 22 percent were from appraisal issues. Survey respondents blamed appraisal-centered delays on the shortage of appraisers, valuations that were not in line with market conditions, and “out-of-town” appraisers who were not familiar with local conditions.”

While there is no quick fix, here are some reasons why we are seeing fewer appraisers:

  • Training. It’s expensive, and an appraiser trainee must have 2000 hours of apprentice training (that’s almost one year based on 40 hours per week) with a fully licensed appraiser.
  • Fully licensed appraisers can’t make any money if they have to split the appraisal fee with a trainee.
  • Trainees make very little money—an average of $27,000—during their training period.
  • Appraisers get lower compensation if the appraisal is ordered through a management company.
  • Appraisers will turn down assignments if REQUIRED to provide a quick turn-around time
  • The average tenure of an appraiser is 22 years and they are not being replaced by younger appraisers.
  • The average tenure of a NEW appraiser is 5 years.
  • Appraisers have the added expense of keeping up with new regulations.

What types of appraisal issues have you been experiencing?

Creative Ways to Get an Offer Accepted when there are Plenty of Buyers but No Homes for Sale

It’s called “Thinventory”:  Plenty of home buyers but very few listings to choose from.

Oh, and when a home is listed, there is a mad rush to set up showings and tons of multiple offers.

So, here are some creative ways to help your buyers GET the place that want to call home.

Pre-Approval Letter:  While you may already require your buyers to get a pre-approval letter before you show them homes, there is actually more to it!

Make sure that the pre-approval letter is REAL — meaning that the lender has entered the buyer’s information into the loan approval system that is connected to Fannie, Freddie, FHA, VA or USDA.

When showing them homes, make sure the lender is available during that time to answer any questions the buyer may have regarding down payment or monthly payments.

Make sure that the pre-approval letter is from a recognized lender — and not from the Bank of the Internet. If the listing agent/seller does not readily recognize the lender, your buyer’s offer may not be accepted.

Get a pre-approval letter for MORE than they want to qualify for. When making an offer, they may have to pay more than the listing price, and if the pre-approval letter is for a lessor amount, the offer may not be accepted either.

Earnest Money: In times of stiff competition, have the buyer write out an earnest money check (even though it won’t be deposited until the offer is accepted) and present it with the offer.

Increase the dollar amount of the earnest money over and above the standard percentage to show that your buyers are very serious buyers.

Buyers’ Letter: While this may be standard practice, here are some tips to kick it up a notch.

  • Include a photo of the entire family.
  • Ask each member of the family to write something about why they want to buy that home. For children who are not able to write, get their verbal reasons and ask the mother/father to put it in writing for them.
  • Not everyone is a “writer”. Help them write/re-write the letter if you don’t feel that they have emotionally expressed the reasons the home would be a perfect fit for them.

I would love to be your lender and start out by making sure your buyers qualify for a mortgage loan.

Please share other ways that you have used to get your client’s offer accepted when there are multiple offers.

The Pendulum Moves

A View from the Beach

May 23, 2017 –


Our economic growth is very cyclical. And the last few cycles we have experienced have been some of the most severe we have seen in history. In the early 2000’s we had a very strong economic boom fueled by an explosion in real estate values. From late 2007 to the middle of 2009, we were subjected to a very severe recession, led by the collapse of the financial and real estate markets. Our latest cycle has been much less severe, as we have witnessed a very gradual recovery. But the length of the recovery has been extraordinary and is now approaching the longest recoveries in history, which have ranged from 80 to 120 months.

There are other types of cycles that typically occur concurrently with these economic cycles. For example, during the real estate boom, just about anyone could qualify to purchase a home. During the recession, credit standards tightened tremendously, and at that time only those with pristine credit could qualify for a home loan. Now, during the recovery, we have seen a gradual swing of the credit pendulum on the other side. No, we are not approaching the days in which anyone who breathed could get a loan.

However, if you look at many aspects of qualification, we have come a long way over time, just as the economy has. For example, FICO score minimums have come down. There are also more programs which require lower down payments. Though verification of income is almost universally required, there is more flexibility with regard to income qualification. As rates have moved up, lenders have become more adventurous regarding qualifying more prospects. Again, we don’t believe we are moving back to the cowboy days of the real estate boom. But we do believe that many who don’t believe they could qualify to purchase a home, now might very well be able to do so.


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