Stocks Have Done It Again

In This Issue...           Last Week in Review: Stocks continue to like the good economic news we have seen, but how are Bonds and home loan rates faring? Forecast for the Week: It will be a heavy week of economic news ahead - including several that will directly relate to the housing industry. Find out what to expect. View: Have a teenage driver? Worried about skyrocketing insurance costs? Have no fear with this advice from Kiplinger.           Last Week in Review           It's been said that "no news is good news...." And while that can be true, lately many of the economic reports we have seen have been very good news, as they show signs that our economy continues to improve. Stocks just enjoyed their seventh straight week of gains, due to the positive economic reports that have been streaming in. While this is certainly cause for celebration, an important question we need to consider is what does this mean for home loan rates in the short and long term? On the one hand, improvement in the economy is good news on the housing front, as once people feel better about keeping their job or getting a new job, home purchasing activity will rise, and values will follow. But on the other side of the coin, as the labor market and economy improve, home loan rates will have to gradually rise as well. And remember, this all ties in with the Fed's plan to inject the full $600 Billion into our economy as part of their latest round of Quantitative Easing, known as "QE2." Remember, the three part goal of QE2 is to create inflation, lower unemployment, and boost Stock prices - and we are seeing evidence of these goals occurring. Not only have Stock prices improved over the last seven weeks as we discussed above, but December's Jobs Report posted the lowest unemployment rate since May of 2009. And last week, we saw some evidence of inflation as the Producer Price Index (PPI), which measures inflation at the wholesale or producer level, came in higher than expected. While December's Consumer Price Index wasn't quite as hot as the PPI, going forward our increasing budget deficit could cause inflation to spike down the road. So what's the bottom line if you have been thinking about purchasing or refinancing a home? Home loan rates are still very attractive right now, so call or email me if you want to get started. Or forward this newsletter on to someone you know who may benefit from today's historically low rates.           Forecast for the Week           There's a holiday shortened week ahead, as both the Stock and Bond Markets are closed Monday in honor of the Martin Luther King, Jr. holiday. But the rest of the week has plenty of news in store, including a read on the housing market: There's a double dose of real estate news with Wednesday's Housing Starts and Building Permits Report and Thursday's Existing Home Sales Report. Analysts are expecting to see a bump higher in Existing Home Sales to a 4.80M pace, and some moderate improvement on the new construction side as well. Check back with me on Wednesday to get the breakdown of how the news actually arrived! There's also a double dose of manufacturing news. Tuesday's Empire State Index looks at New York State's manufacturing sector and is a good gauge of manufacturing overall, while on Thursday we'll also see the Philadelphia Fed Index, another important report. Thursday's weekly Initial and Continuing Jobless Claims Report will be an important one to watch this week. Last week Initial Jobless Claims came in at 445,000, well above expectations of 415,000 and the highest reading in two months. Was this spike just a paperwork backlog because of the holidays... and will this week's claims be close to that 400,000 mark that will show the labor market is continuing to improve? Also, earnings season continues, with reports from Citigroup, Apple, Google, GE, Goldman Sachs, and more. 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, Bonds and home loan rates ended the week about the same place as where they began. If I can answer any questions for you about your personal situation, please call or email anytime. ----------------------- Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jan 14, 2011)           The Mortgage Market Guide View...                   8 Ways to Cut Insurance Costs for Teen Drivers You can prevent your auto premiums from skyrocketing. By Kimberly Lankford, Kiplinger.com My 16-year-old son is about to get his license, and I'm afraid of what that might do to our auto-insurance rates. How can we lower insurance costs? You're right to be worried -- your auto-insurance premiums are likely to skyrocket when your teenage son starts driving. But a few key moves can help you cut costs significantly. 1. Raise your comprehensive and collision deductibles to at least $1,000, which lowers your premiums and prevents you from filing small claims that could jeopardize a claims-free discount. Add some more money to your emergency fund so you'll have the cash to pay the deductible if anyone in your family does have an accident. 2. Drop collision and comprehensive coverage entirely on older cars that are worth little more than the deductible. You may be paying more in premiums than you could ever get back from the insurer, even if the car is totaled. Look up your car's value on Kelley Blue Book. 3. Get a safe car. Having your child drive a safe car will help you sleep easier and keep your auto-insurance rates under control, too. Check safety ratings at the Insurance Institute for Highway Safety. 4. Encourage your kids to get good grades. Most insurers offer a big discount for young drivers who maintain at least a B average in high school or college. College kids generally need to take at least 12 credits to qualify for the discount, says Trisha Mujadin, an independent insurance agent with NRG, a Seattle insurance agency. 5. Tell your insurer if your child goes away to college. If your child goes to school more than 100 miles away and doesn't take a car, you can usually get a big break on your premiums but still have coverage when he or she comes home for vacation. 6. Ask about other discounts for teenage drivers. Some insurers offer discounts for driver-safety programs, cutting costs if the kids take a special class, watch a DVD, or read a driver-safety book and take a test. Ask your insurer what your kid needs to do to qualify. 7. Make the most of multipolicy discounts. You'll usually get a break on your auto insurance and your homeowners insurance if you keep both policies with the same company. You may get an additional discount if you include an umbrella policy, which provides extra liability coverage beyond your auto-insurance limits and can be particularly valuable when you have a teenage driver. 8. Shop around. Some insurers offer much better deals than others for teenage drivers, so it's important to compare costs. The insurance company that offered the best rate for you and your spouse may have some of the highest rates when you add a teenage boy to the policy (and it's almost always better to add the child to your policy rather than have him get his own policy). "One company we work with is really great with young drivers and another is horrible," says Mujadin. You ca

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