Jobs or the Lack of Them….
by Tom on March 4, 2009
in Education, Market Musings
The ADP index comes out on Wednesday and the BIG report comes out on Friday. What does this tell us?
- The jobs situation isn’t good at all. According to their statistics, approximately 24,000 people lost their jobs every day in the month of February. Ouch.
- What does it mean for the mortgage world? In a normal market, I’d say that it would push rates down as mortgage backed securities would be part of the “flight to quality” that this economic news would bring. However, I see the opposite happening. Investors are going to look at jobs reports and say: 1) Yuck, this isn’t good for the overall economic situation. 2) This isn’t good for the housing market and therefore 3) I’m going to steer clear of investing money in Fannie Mae or Freddie Mac because the housing trouble isn’t done. So, rates are going to go up.
Stay tuned, we’ll write and hear a lot more about jobs in the next few days.
ADP index shows private-sector jobs fell by 697,000 in Feb. – MarketWatch
U.S. private-sector firms cut 697,000 jobs in February, according to the ADP employment index, which is based on millions of company payroll records. The ADP index released Wednesday showed the goods-producing sector shed 338,000 jobs, the 26th consecutive decline. The services sector lost 359,000 jobs.
Tom:
I’m in a bind and need the wisdom from you to help me know what I don’t know. For example, rates are excellent and may get better in the future and I’m unable to take advantage of them. Here’s the short story:
I was laid off November 1st of 2008 and have been since as the job market in my area (at least for IT related jobs) is terrible. However, I’ve saved plenty of money for emergencies over the last few years and unemployment is easily covering my costs as I live below my means and have no debt other than my mortgage.
My bank tells me they refuse to refinance my mortgage (I currently have a 30 year fixed at 6.875%) because I’m laid off and have no W2 income. However, I’m sure as heck charged income tax on my unemployment so why isn’t that account for? Secondly, I’ve NEVER missed a payment, have excellent credit (750+ FICO), and am even more than a month ahead on my mortgage payments so even if I missed a month I’m still ahead.
Are there any lenders out there that would refinance the mortgage for me? I have to reasons:
1. Saving money – If I refinance down to 5% I’ll be saving almost 2% a year on my mortgage and nobody has to see the calculations to see just how much that makes in savings over 30 years. Plus I can use the extra savings per month to pay more down on the principle (i.e. make the same monthly payment I have been would put almost $200 more per month towards the principle).
2. PMI – I’m currently paying PMI but am at or just a couple thousand dollars short of getting it removed. If I refinance I’ll be easily past the 20% mark and can remove my PMI of about $60 per month which would again allow me to pay even more towards the principle.
As you can see I’m very good with my money, I’m paid in advance on the mortgage, no other debt, excellent credit, and am only trying to make things better for myself not because I need to but because it’s the smart thing to do.
Can your firm help me out or do you know someone who can? Thanks Tom!
- Joshua