Freddie Mac recently released its U.S. Economic and Housing Market Outlook for October showing that the federal government shutdown, debt ceiling issues, and the slowing economy -- including the severely depressed level of new home construction -- are slowing the housing recovery heading into the fourth quarter of the year.

"The housing recovery keeps chugging along despite a constant barrage of disruptions to the broader economy,” says Frank Nothaft, Freddie Mac vice president and chief economist. “We're likely going to see the housing recovery slow down, but not shut down, as we close out the rest of this year due to tight inventories in many markets, rising mortgage rates and slumping consumer confidence. Fortunately, the housing recovery should continue to absorb the economic shocks in stride and improve next year."

Outlook Highlights

• By the end of the year, expect mortgage rates to be around the 4.3 percent level, and head higher in 2014.
• Due to the government shutdown, we've revised down fourth quarter growth projections by 0.5 percent.
• Inventories remain tight at a 5 months' supply as of September due to negative equity, a declining supply of distressed sales, and a severely depressed level of new construction.

Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates hitting their lowest levels since this summer amid market speculation that the Federal Reserve will not alter its bond buying purchases this year.

Findings

• 30-year fixed-rate mortgage (FRM) averaged 4.13 percent with an average 0.8 point for the week ending October 24, 2013, down from last week when it averaged 4.28 percent. A year ago at this time, the 30-year FRM averaged 3.41 percent.

• 15-year FRM this week averaged 3.24 percent with an average 0.6 point, down from last week when it averaged 3.33 percent. A year ago at this time, the 15-year FRM averaged 2.72 percent.

• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.00 percent this week with an average 0.4 point, down from last week when it averaged 3.07 percent. A year ago, the 5-year ARM averaged 2.75 percent.

• 1-year Treasury-indexed ARM averaged 2.60 percent this week with an average 0.5 point, down from last week when it averaged 2.63 percent. At this time last year, the 1-year ARM averaged 2.59 percent.

"Mortgage rates slid this week as the partial government shutdown led to market speculation that the Federal Reserve will not alter its bond purchases this year. The weak employment report for September added to this expectation,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “The economy added just 148,000 jobs, which was below the market consensus forecast and less than the 193,000 jobs increase in August."

Lenders, like any business, have to make a profit. The cost of acquiring the funds, the operating costs to service and the expected profit margin are easily identified. The variable in pricing is the type of mortgage and the credit worthiness of the borrower.

A loan with a 3.5% down payment is riskier than a loan with 20% down payment. If the lender has to take the property back to recover their expense, the margin is greater between what is owed and what the property is worth on an 80% mortgage.

Credit scoring is a risk-based pricing method that allows a lender to be competitive in the market for the best loans from different borrower groups. Individual lenders set their own levels for what they consider “A” credit which is reserved for the best rates. If good credit is approximately 710 to 740, scores below that are considered higher risk and will have higher rates.

Risk must be assessed for both the borrower and the property that collateralizes the loan. The borrower’s credit history and income stability are strongly evaluated by the lender but if a default should occur, the property must secure the loan to avoid a loss to the lender.

The challenge for some buyers is they are unaware of what their credit score is and how it will affect the interest rate offered by the lender. It is to the buyer’s advantage to be pre-approved by a reputable lender prior to starting the process of looking for a home. In some cases, the lender can actually improve the borrower’s credit score to help them qualify for a lower interest rate.

Contact me for a recommendation of a trusted mortgage professional - HiltonHeadRealtySales@gmail.com

We live in a busy world full of demands on our time and attention - everything from keeping up with our families and careers to making sure we are taking care of ourselves and answering our cellphones by the third ring.

To meet all of life's challenges, sometimes you need to take a step back, sometimes you need to take charge, and other times it makes sense to delegate tasks to someone else - often times a professional such as a contractor, attorney or financial advisor. But for most people, turning things over to someone else shouldn't mean tuning out completely - especially when it comes to something as important as your financial future. When it comes to money and investing, most people feel more confident keeping one hand on the wheel to help ensure their best interests are being served.

But how do you know if you're doing that now or not? Here are three questions every person who invests should ask to determine how involved they are with their investments and if they're getting the level of engagement they want from their current investment professional:

1. Does my broker encourage me to be actively involved in my investment strategy?

Ninety-seven percent of Americans who are highly engaged in various activities in their lives say they want to be involved in the decisions that their broker is making, according to a Schwab study of engaged Americans conducted in May 2013. Does your broker make this easy for you to do? Sitting down and having a conversation with your broker to discuss the level of involvement you want is the first step. You should determine how and when you'd like to be contacted so your broker can keep you up-to-date on major developments in your financial situation. Make sure you feel empowered to ask questions and your broker's answers make sense, you are comfortable giving feedback, and your broker encourages you to check in as frequently as you want - on your terms.

One of the anxiety highpoints during the sale of a home is waiting for the buyer’s home inspection report. Most sellers willingly disclose what they know about their home to any potential buyers. The concern stems from the inspector finding something that they’re totally unaware of and that it will either cost them a lot of money to correct or the buyer will simply use it to void the contract.

If the inspection does reveal some unknown problem with the home, it’s probably as big a surprise to the buyer who is not as emotionally or financially invested as the seller. It is human nature to fear what you don’t understand and when a report identifies defects, they may simply opt-out of the home.

The solution to the situation may be for the seller to have the home inspected prior to putting it on the market. There is still a risk of becoming surprised by an unknown defect which at that point, would have to be disclosed to potential buyers or repaired by the seller. The advantage is that it creates a baseline to compare discrepancies that may arise when a future buyer has the home inspected.

If the seller’s inspection report is made available during the marketing process, it could give buyers a sense of confidence about the home even though they may still choose to have the home checked by their own inspector.

With over half of all homeowners planning to make some type of improvement to their home this year, the question is, what exactly are they changing? Homeowners are choosing to wait until the high temperatures break and cooler weather hits to begin outdoor work, and home improvement companies are looking to unload new products to prepare for the new season, allowing homeowners to grab some great deals as autumn begins.

The most common fall home improvement projects include fencing, interior and exterior painting, window work, flooring, and roof repair, all of which are in preparation for the cold winter weather when home improvement projects are not at the top of your priority list. By getting these projects done before winter, you can put your home improvement projects to rest until spring without worrying about leaky roofs, cold air coming through cracks in the windows, and maintaining the value of your home with fencing and a fresh coat of paint.

"The cooler autumn temperatures make for the perfect time to focus more on the home and any remodeling projects," said Jeremy Floyd of Fence Center. "Such projects like adding in bamboo or aluminum fencing, not only increases your family's security, but the value of your home. Now that autumn is officially here, people are likely beginning to get these home improvement projects rolling."

While giving a new $900,000 home a thorough going-over, Salt Lake City home inspector Kurt Salomon found a problem under the deck. The builder had cut corners, using the wrong kind of fasteners to secure the deck to the house. Yet, the municipal building official had approved the work.

"In some cases, a building inspector is not going to crawl underneath the deck looking at the hardware. A good home inspector will," says Salomon, past president of the American Society of Home Inspectors.

Because it uncovers aspects of the home that are unsafe or not in working condition, an inspection is a must when buying a home, says J.J. Montanaro, a certified financial planner with USAA.

"You want surprises that come with homeownership to be happy surprises, not bad ones," Montanaro says. "A thorough home inspection by a certified professional can help ensure that's the case."

Salomon says an inspection of the house you want to buy helps identify not only safety concerns and failing structural elements but faulty mechanical systems and areas that soon may need maintenance.

The government shutdown is causing a flurry of anxiety throughout the nation, and worry is accumulating throughout the housing industry. Despite a small fall cool down due to rising interest rates, the rebound was still moving forward with momentum, and industry experts now fear that the shutdown could stall and potentially derail the progress of housing. However, is the actual problem the shutdown, or the fear that it is creating?

“It's mostly fear-based,” says Lawrence Yun, Chief Economist for the National Association of REALTORS. “During the first week of shut down, there was no sizable impact,” he continues.

While the U.S. Department of Agriculture—currently sidelined--provides loans directly to buyers in rural and exurban areas, Yun notes that the program only makes up 3 percent of the overall housing market.

“So three percent is currently out of the game, but the remainder—FHA, Fannie and Freddie, they are still operating, and some of the documentation requirements are being temporarily waived, so throughout the first week the shutdown appeared to have no large impact,” Yun continues.

The holiday season is right around the corner, and with it comes the age-old debate about whether or not it’s a good idea to try and sell your home between now and the end of the year. While some real estate professionals believe the time between Thanksgiving and New Year’s is too busy for people to concentrate on house hunting, others are adamant that those looking to buy during the holiday season tend to be more serious and more likely to make a decision quickly.

If your house is priced right and fits what a buyer is looking for, there will be a market for it no matter what time of year it is, holidays included. Plus, thanks to the Internet, buyers can still look at properties while holiday shopping or attending parties, so the time element isn’t as much in play as in the past.

One plus of keeping a home on the market throughout the holidays is that people who relocate for jobs often do so in January, so November and December become important house hunting months for them, especially since they may have more time off to look at homes in person.

People may also want to take advantage of the tax benefits that come from buying a home, and purchasing in December is a great way to do so.

A: You can get a home loan from several different sources—a credit union, commercial bank, mortgage company, finance company, government agency, thrift (which includes savings banks and savings & loan associations), mortgage broker, and even the seller.

Note, however, that many lenders have tightened their credit standards in light of increasing foreclosures and higher delinquency rates.  Begin your search by calling at least half a dozen lenders to inquire about the types of financing available, current rates on each loan type, loan origination fees and number of points, other loan features and their credit requirements for borrowers.

Once you actually apply for a mortgage, the lender will pull a recent copy of your credit report. That inquiry and any and all others are recorded and become a part of your credit file. Normally, several inquiries during a short period are viewed negatively, as a sign you are trying to open several new accounts. Such a move lowers your credit scores; and lower credit scores mean you will be offered a higher mortgage interest rate.