Madison Dream Homes Blog

Take a bite out of closing costs

BEND, Ore. (CNN/Money) - With mortgage rates still as low as they are, financing a house is dirt cheap these days, right?

 

Not if you pay a fortune in closing costs.

As anyone who has shopped around for a mortgage knows, it's extremely difficult to compare one lender's offering to with that of another lender because the up-front fees vary so much and are not guaranteed. Lenders and their venders can, and sometimes do, add or inflate fees in the eleventh hour of a transaction.

The U.S. Department of Housing and Urban Development (HUD) has been working on regulations that promise to simplify the mortgage process and save consumers as much as $1,000 off a typical mortgage transaction. When such rules will be rolled out, if ever, is still anyone's guess.

With no regulation in sight, borrowers should consider these strategies for keeping their closing costs in check.

Get friendly with your current lender

If you're looking into refinancing, the first call you should make is to your existing lender, who already has critical information about you and your house on file, said Keith Gumbinger, vice president for HSH Associates.

Since you have an existing relationship, a "streamlined" process might be possible. That can save you a lot of extra paperwork and money on everything from application fees to appraisal fees.

Fee-ed Up? Here are just some of the costs of closing on a mortgage. Fee  Average cost*  Application  $272  Appraisal  $310  Credit report  $28  Document preparation  $206  Processing  $288  Recording  $86  Underwriting  $236   *Based on a $100,000 loan. Not every lender surveyed charges all of these fees.  Source:  HSH Associates December 2003 survey of lenders

Although fees for title search and title insurance are not determined by the lender, you may also get a break there. If you recently refinanced or took out a loan, you can save as much as 50 percent on title insurance by asking for a reissue rate, which your lender can request on your behalf.

If you're a homeowner shopping for a new house, you should also try giving your existing lender first dibs on the new business. Assuming you've been a good client and your lender originates the kind of mortgage you're interested in, it's possible to get a better-than-market deal, according to Gumbinger.

Get nitpicky about fees...

There are more than a dozen kinds of fees that could show up on your final closing statement, including credit report fees, appraisal fees, document preparation fees, title fees, recording fees and underwriting fees.

Related articles • Big homebuying regrets • Are you buying at the top? • Why credit matters

All told, fees on a $200,000 mortgage could add up to anywhere from $1,000 to $3,000 – that's not including any "discount" points you pay up front to get the best interest rate. (A "point" is a fee that equals 1 percent of the loan amount.)

Lenders are required to give you a good-faith estimate of your closing costs within three days after you apply for a loan. Some will give you such an estimate even before you apply if you ask for one. Even if it is no guarantee, this written estimate will give you an idea of what kind of fees you can expect to pay, as well as an opportunity to negotiate for a better deal.

"If you're a good credit borrower you can challenge fees if they seem excessive," said Gumbinger, noting that lenders don't control many fees that show up on your statement.

Keep in mind that the good faith estimate doesn't include such out-of-pocket costs as state mortgage taxes, homeowners insurance and property taxes, which you may be expected to pay at the time of closing. In fact, your total tab at closing could be several times more than originally estimated, said Gumbinger.

... but keep the big picture in view

Closing costs are certainly a consideration for both new loans and refinancing. But it's important to not lose sight of what should be your first priority – getting the lowest rate possible.

Indeed, the difference between paying, say, 6 percent and 5.5 percent on a new loan adds up to nearly $23,000 in total interest on a $200,000 30-year loan. If you have to pay a few hundred dollars in closing costs to get that rate, you can rest assured that it is a worthy investment.

It may even be worth it to pay a point or so up front in order to lock in the lowest rates. Let's say that you'll knock your rate down to 5 percent on that $200,000 loan by paying an extra point ($2,000) up front. Considering that you'll cut $62 off your monthly payment and about $22,000 from total interest by going from 6 percent to 5.5 percent, it makes sense as long as you plan to stay in the house long enough to recoup those up front costs.

In fact, if you're short on cash you might even consider rolling the closing costs into your loan, if that is an option. You'll want to consider how much more you'll pay each month as well as in interest over the life of a loan.

If you roll $2,000 in finance costs into a loan with a 5.5 percent rate, for example, you'll pay an extra $11 a month and about $2,000 extra in total interest. In this case you're still better off than if you had not refinanced at all.  

Mortgage rates: 30-year still rising

Home lending rates jump higher, with the 30-year fixed rate spiking to 5.45% in the week ended Wednesday.

By Catherine Clifford and Julianne Pepitone, CNNMoney.com staff writers

NEW YORK (CNNMoney.com) -- Home mortgage rates jumped in the most recent week, pulled higher by rising Treasury yields, according to a report released Thursday.

The average 30-year fixed mortgage rate rose to 5.45% in the week ended Wednesday, up from 5.24% last week, according to a weekly national survey from Bankrate.com.

"Investors' nerves were rattled by a potential General Motors (GM, Fortune 500) bankruptcy and a week of substantial government borrowing," which "agitated would-be bond investors," the report said.

Mortgage rates move in tandem with Treasury yields. In particular, the 30-year fixed mortgage rate tracks the benchmark 10-year Treasury yield. In recent days, that benchmark yield has spiked to levels not seen since November 2008.

"Now the ball is in the Federal Reserve's court, as they could step up the pace of their bond buybacks in an effort to reverse some of this week's increase," the report said.

Even as mortgage rates continue to rise, they still remain much lower than last year, when the average 30-year fixed mortgage rate was 6.20%, according to Bankrate.com.

To translate the difference in mortgage rate into dollars for a homeowner, consider a $200,000 loan. At 6.2%, the monthly payment would come out to $1,224.94, or $95 higher than the $1,129.31 monthly payment at 5.45%.

With the government spending hand-over-fist to jumpstart the economy, the Treasury has been forced to sell unprecedented amounts of debt. The volume of supply has pushed down prices, sending yields higher. Yields and prices move in opposite direction.

Rising mortgage rates could slow a housing recovery, which the Obama administration has been working hard to jumpstart in an effort to start pulling the economy out of its recession.

0:00 /2:48Rebuilding housing?

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

Other rates: The average 15-year fixed rate mortgage jumped to 4.86% from 4.74% the week prior.

The average jumbo 30-year fixed rate ticked up to 6.6%. Loans are considered "jumbo" when they are too large to be purchased or guaranteed by Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500). Jumbo loans have higher rates than smaller "conforming" loans, which do have guarantees.

Adjustable-rate mortgages were mixed, the report said, with the average 1-year ARM inching higher to 5.03% and the 5-year ARM sinking to 4.94%.  

Low prices bring investors back into many markets.

By Les Christie (CNNMoney.com)

Last Updated: June 4, 2009: 12:58 PM ET

NEW YORK (CNNMoney.com) -- Home price declines have sent affordability soaring. Prices have fallen so far that the average U.S. home is now undervalued by 12.2%, according to a new report from IHS Global Insight.

"The good news is that the declines are happening as consumer confidence is rising and housing sales and [building] starts seem to be bottoming out," said Jeannine Cataldi, senior economist for IHS in a statement accompanying the study.

"The bad news is that job losses continue at high rates, housing inventories are still elevated and consumers, while becoming somewhat more confident, are still wary in the face of economic uncertainty."

Prices still falling

The IHS study, House Prices in America, reported that, of the 330 markets it tracked, homes are under-priced in 248. That contrasts sharply with four years ago when only 108 markets were undervalued.

One-time bubble markets are now going through sales renaissances, according to Cataldi. "In Las Vegas and Phoenix, people are going in and snapping up foreclosures," she said. "They often rent them back to the former owners."

The report claimed the most undervalued metro area in the nation is Vero Beach, Fla., where the median home price has fallen 29.7% since the first quarter of 2005 to $125,400. That is 42.5% below the expectation. Houma, La., prices, at a median of $113,500, are undervalued by 41.4%. Las Vegas prices have dropped more than 46% since 2005, and the city is now undervalued by 40.9%.

To arrive at these figures, the analysis focused on three key factors of home affordability: income, housing densities and historical prices. IHS used that to define statistically normal house values for a given area and then compared them with the actual prices. The difference between those two figures determines how much a place is under - or over - valued.

And there are still some over-valued areas. Atlantic City, N.J., for example. Here the median price is $243,600, an overvaluation of 44.1%, the most of any metro area. The Ocean City, N.J., median price of $302,100 is the second most overvalued, at 33.8%. In third place is Wenatchee, Wash., which at $247,100, is 29.3% above normal.

In the biggest metro area, New York City, the price is just about right, with a median at $469,400, an under-valuation of just 3.3%. Los Angeles ($357,100) is a bit further off, undervalued by 6.6% and Chicago ($220,800) is down 13.2%.

One may presume that the undervalued cities should return to their natural equilibrium and astute real estate investors and homebuyers could pounce on bargains and make a profit later. But Cataldi thinks that could take a long time. "Price declines are slowing but we're still cautious," she said. "We're predicting stagnant prices through 2011."

Bottom fishing

In Florida, there are many condo developments with listings ripe for plucking, either in bunches or individually, according to Matt Martinez, who represents a private equity group that is investing hundreds of millions of dollars there. He reports that investors are able to make profits of 7% to 8% a year, after all expenses, by buying condos and then renting them at market rates.

"Even higher [profits] exist on some highly distressed fractured condo deals where the lenders are selling the notes," he said.

In California, sales of deeply discounted distressed properties are flourishing, according to the California Association of Realtors. Inventory of homes priced under $500,000 has shrunk to a three-month supply at current rates of sale while the supply of million-dollar homes has expanded to 17 months.

"The dramatic difference in inventory exemplifies how the low end of the market is attracting more first-time buyers and investors, creating a shortage of distressed properties for sale," said James Liptak, president of CAR, in a statement accompanying the sales data.

Even the battered Michigan market is attracting investors, according to the CEO of the Michigan Association of Realtors, Bill Martin.

"It tends to be in the low-to-middle price range that is moving," he said. "There has been investment buying, mostly concentrated in Detroit. People are buying up bundles of 100 to 200 homes."

The median single-family home in the Detroit metro area -- where layoffs may threaten any recovery -- sold for $77,700 during the first three months of 2009, according to the IHS report, but many repossessed homes in the city itself are packaged and sold as bundles and can be had for under $10,000 apiece.

These markets may be in the forefront of a market recovery but, according to the IHS report, it's too early to call a bottom.

"More observations through the spring will be needed to support this trend," it said. 

Homes: Almost 20% cheaper

S & P/Case-Shiller index reports huge decline of 19.1% for the first quarter.
By Les Christie, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- The home price slide accelerated during the first three months of 2009, according to a report issued Tuesday.

The S&P/Case-Shiller National Home Price index, a bellwether of real-estate market direction, plunged a record 19.1% during the quarter compared with the first three months of 2008. That followed an 18.2% drop last quarter.

The Case-Shiller 20-city index dropped 18.7% year-over-year, also a record. It fell 18.5% during the last three months of 2008. This index has plummeted 32.2% from its July 2006 peak and has fallen 32 straight months.

The national index covers almost all homes sold throughout the United States and is reported quarterly, while the 20-city index reports sales in 20 major metro areas and represents a cross section of the national market. The 20-city index comes out every month.

"Declines in residential real estate continued at a steady pace into March," said David Blitzer, chairman of the Index Committee at Standard & Poor's in a prepared statement. "All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines."

The ugly report was somewhat unexpected, according to Mike Larson, a real estate analyst for Weiss Research.

"The market was anticipating better results," he said. "There had been some signs of increased sales in post-bubble markets."

Home prices at AOL.com

But that sales increase has not translated into higher prices. Bargain hunting - bottom fishing really - for foreclosures and other distressed properties has driven sales volume up while further depressing prices.

The foreclosure sales, which many appraisers used to ignore when they evaluated home prices because they represented outliers rather than typical sales, now have to be accounted for.

"These used to be anomalies," said Larson. "Now, when sales are dominated by foreclosures, where they represent 50% or more of [transactions], they are the market."

The market plague has burst far beyond its Sun Belt epicenter, as the latest month's data reveals. In March, Minneapolis recorded the largest monthly price loss of any metro area in the 20-city index, losing 6.1% compared with February. That is the biggest single-month decline for a city in index history.

Sun-Belt cities still had the largest year-over-year declines in March, with Phoenix prices down 36%, Las Vegas off 31.2% and San Francisco dropping 30.1%.

Two cities have now have fallen more than 50% from their peak prices: Phoenix is down 53% since June 2006 and Las Vegas is off 50.4% from its August 2006 high. Dallas prices suffered the smallest loss from peak, just 11.1% since June 2007.

Economist Mark Zandi, the founder of Moody's Economy.com, is optimistic that the market will stop falling sometime this summer or fall. "We need to focus on the mortgage-modification program," he said. "If that plan doesn't work or only works as well as the other modification programs have, we've got a problem." 

Steady home sales could be positive signal

April sales are a sign to some economists that the worst of the housing downturn may be over.

By Catherine Clifford, CNNMoney.com staff writer          

NEW YORK (CNNMoney.com) -- Sales of newly constructed homes were almost flat in April -- but in a sickly housing market, economists saw a few reasons for hope.

The Commerce Department said new home sales ticked up 0.3% last month to a seasonally adjusted annual rate of 352,000. That was from a downwardly revised reading of 351,000 in March.

Analysts were looking for the rate of new home sales to rise to 360,000, according to a consensus estimate of economists compiled by Briefing.com.

"We aren't seeing a huge upswing in market conditions. But we aren't seeing things fall apart again, either," said Mike Larson, real estate and interest rate analyst at Weiss Research, in a research note.

New home sales -- which have plunged as builders struggle to construct homes to compete with drastically cheapened foreclosure properties -- were 34% below the same month a year ago, when they estimate stood at a 533,000 annual rate.

The median sales price of new homes rose to $209,700 in April, up nearly 4% from a revised median home price of $202,200. That was still 14.9% behind the median price of $246,400 the same month a year ago. The average sales price was $254,000, down 1% from a revised $257,100 in March.

Inventory reduced: Drastically reduced prices have lured in enough buyers to start chipping away at the glut of inventory that has been weighing down the market. At the end of April, the seasonally adjusted estimate of new homes for sale was 297,000, or a 10.1 month supply at the current sales rate. In January, there was a revised 12.4 months of supply on the market.

"Inventory levels continued to improve and broke through 300,000 for the first time since 2001," said Adam York, economist at Wachovia, in a research note. "We are encouraged by the relative stability in sales and the continued improvement in inventory levels."

Plunging mortgage rates also served to attract buyers into the market. But as Treasury yields have risen recently, so have mortgage rates. According to a weekly survey from Bankrate.com, the 30-year fixed mortgage rates rose to 5.45% in the week ended Wednesday, up from 5.24% in the prior week.

However, last week's rate was still significantly below the 6.20% of a year ago, and the historically low rates could continue to bring buyers, according to one economist.

"We still think the combination of very low mortgage rates and falling inventory will entice people back into the market in greater numbers over the next few months," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, in a research note.

But he called the April sales rate "a bit disappointing, given the hefty increase in homebuilder sentiment in the past couple of months."

Slow and steady: Going forward, if indeed the worst is over, economists say improvement will be slow and steady.

"Looking back, January may turn out to have been the bottom in new home sales," said Wachovia's York. "We do not expect a major pick-up in the near term, but stability over the summer would not be a surprise."

Even with home inventory levels shrinking and home prices attracting new buyers, "there is no evidence whatsoever of a renewed housing boom -- just a gradual increase in activity in some markets, brought about by lower prices, lower mortgage rates, and tax and builder incentives," said Weiss' Larson. 

 

Money 101: Buying a home

Top things to know 

1. Don't buy if you can't stay put.

If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. When prices are falling, it's an even worse proposition.

2. Start by shoring up your credit.

Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Aim for a home you can really afford.

The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. If you can't put down the usual 20 percent, you may still qualify for a loan.

There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.

5. Buy in a district with good schools.

In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.

6. Get professional help.

Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

7. Choose carefully between points and rate.

When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say three to five years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.

8. Before house hunting, get pre-approved.

Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.

Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to 10 percent lower than what the seller is asking.

10. Hire a home inspector.

Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.

Mortgage rates 'all over the map'

Average 30-year fixed inches higher to 5.24%.

By Julianne Pepitone, CNNMoney.com contributing writer May 21, 2009:

NEW YORK (CNNMoney.com) -- Home mortgage rates were mixed this week, with the average 30-year ticking higher, according to a report released Thursday.

The average 30-year fixed mortgage rate jumped to 5.24%, up from 5.21% the previous week, according to Bankrate.com's weekly national survey.

Even with the increase, rates remain at historic lows, the report said. Rates have plunged since late October, when 30-year fixed home mortgage rates averaged 6.77%.

"The economy remains very weak, and those concerns are balancing out the worries investors have about the amount of government debt issuance," the report said, because mortgage rates are closely tied to long-term Treasurys.

"The prospect of ongoing purchases of government and mortgage-backed debt, as well as the possibility that the Fed could increase the pace of those purchases should conditions warrant, will help keep a lid on rates for the balance of 2009," the report added.

Six months ago, the average 30-year fixed mortgage rate was 6.33%, meaning a $200,000 loan would have carried a monthly payment of $1,241.86.

With the average rate now at 5.24%, the monthly payment for the same size loan would be $1,103.17, meaning homeowners who refinance now would save $138 per month.

Other rates: The average 15-year fixed rate mortgage fell to 4.74% from 4.76% the week prior.

The average jumbo 30-year fixed rate fell to 6.37%.

Adjustable rate mortgages were also mixed, the report said, with the average 1-year ARM falling to 4.94% while the 5-year ARM increased to 4.96%.  

Homebuilders: 'Best conditions in a lifetime'

The latest survey of homebuilders' confidence reveals that tax credits, mortgage rates and market options are boosting sentiment.

By Julianne Pepitone, CNNMoney.com contributing writer

May 18, 2009: 1:04 PM ET

NEW YORK (CNNMoney.com) -- Homebuilders' confidence rose in May - the second consecutive month - boosted by first-time homebuyer tax credits and a more affordable housing market, according to a report released Monday.

The National Association of Home Builders/Wells Fargo said its monthly index rose two points to 16 after having jumped five points in April.

While 16 is still a low score - any number below 50 indicates that more builders view conditions as poor rather than good - it shows sentiment is improving.

Two out of the three components of the index rose in May: Current sales conditions jumped two points to 14, and sales expectations for the next six months rose three points to 27.

The gauge of prospective buyer traffic remained unchanged at 13.

'Conditions of a lifetime'

"Builders are responding to what they perceive to be some of the best home-buying conditions of a lifetime," NAHB Chairman Joe Robson said in the release. A report earlier this month showed home prices fell 14% in the first quarter of 2009.

"You're not likely to get a better deal in terms of mortgage rates than what's available right now," added Robson, who is a home builder in Tulsa, Okla.

0:00 /0:46Tax break for homebuyers

The report also cited encouragement from the Department of Housing and Urban Development's recent announcement that it plans to allow home buyers to use the stimulus package's $8,000 tax credit as downpayment cash.

Has the market hit bottom?

The uptick from April's five-point jump was "no fluke," NAHB chief economist David Crowe wrote in the report. "This continued increase indicates that home builders feel we're at or near the bottom of the market."

"Provided that builder access to production credit significantly improves," the market should continue to skew positive for home buyers and builders alike, he said. 

Discovering the Good in Today's Real Estate Market

Finding the good in any situation takes just as much effort as looking for the bad. We can look at a glass as being half empty or half full.

With markets all across the nation facing all sorts of challenges, it is critical that we, as professional REALTORS®, discover the good in today’s real estate market – and there is lots of good – even in my market down here in Florida. And you’ve all heard the horror stories about the terrific mess we are in. Despite all that, I choose to find the sunshine amidst the clouds and want to send some rays your way. So put on your sunscreen!

1. One of the first positive things that has occurred since we changed from a hot seller’s market to a full-blown buyer’s market is that buyers have abundant choices. Over the past few years there has been limited inventory, and buyers had limited choices. Now with inventory levels at all-time highs, buyers have the pick of the market. No more settling for something just to get into the market; now buyers may take their time and pick the home that meets practically all of their requirements. And they are not rushed with the fear that if they don’t strike quickly they will lose their choice. They can take their time and be choosy.
2. The second advantage of this “new normal” is that money is cheap. Interest rates are the lowest they have been in a long time. And we all remember from our licensing course that the cheaper money is, the more house you can buy. I am not suggesting anyone buy beyond his or her means. I am saying that as interest rates dip lower, homes become more affordable.
3. The third benefit of our current market is that, for the most part, sellers are willing to strike a deal and to work with us. I realize that there are some sellers who still think it is 2004 or 2005 and have their heads in the clouds as far as market value goes, but in general the ball is in our court. If they truly want to sell they must listen to us concerning value, as most markets have softened. This is super when it comes to converting a FSBO or chasing an expired listing. I can remember back a few years ago when my local market was hot and sellers began to think they could sell without me, and sometimes they did. Now we are back in the driver’s seat, and it is more difficult than ever for sellers to market their own properties.
4. The fourth wonder is that, with a softer market, sometimes our vendors are in need of business and may be willing to offer a better price. You could even go further and say that builders, carpenters and most trades people may need the work and be willing to offer unbelievable prices to earn your business. My vendors are offering better customer service and prices to get the business. And I am not waiting as long for a master carpenter, plumber or roofer. They are actually returning my calls, hungry for work.
5. The fifth ray of sunshine is the 2009 $8,000 tax credit available for first-time home buyers. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All U.S. citizens who file taxes are eligible to participate in the program, depending upon their income. This housing stimulus and stabilization is certainly a huge plus for the current market environment. To help you succeed, make sure you share this with everyone with whom you come into contact. I am finding that many people are not aware of the credit or, the moment they hear “first-time home buyer,” they shut down because they don’t understand the definition. Contact your favorite lender to get up to speed on this topic, and work together to spread the word to get families into homes! This is the gold in today’s real estate market.
6. One last plus is the reinstatement of higher loan limits by the Federal Housing Administration, Fannie Mae and Freddie Mac for mortgages in high-cost areas. This will also help reduce the huge inventory of homes and improve liquidity in the overall mortgage market.

                                                                By Marcus A. Wally

Recession end in site ?

One of America’s most reliable economic forecasters says the current recession -– the longest in half a century — will end this year, possibly as early as this summer.

Lakshman Achuthan, Managing Director at the Economic Cycle Research Institute (ECRI), was one of the first to declare that the U.S. was in a recession. Now he’s one of the first to say its ending. ECRI, he says, is a research group that studies business cycle recessions and recoveries and has a near-perfect record of predicting. They do it by crunching various pieces of data and creating “leading indicators” which show where the economy is headed.

The indicator that looks the furthest into the future actually started showing signs of future growth as early as last November, as the worst of the credit crisis started to ease. Another indicator, with a shorter lead-time into the future, started pointing toward growth in early December.

Both indicators have showed steady growth since then and that, says Achuthan, is enough data for him to say this recession is ending. That’s because, over the last 75 years, when those indicators turn up, the recession ends within four months. No exceptions, says Achuthan.

But don’t buy the party supplies just yet. The end of a recession simply means that things will start becoming “less negative.” A top adviser to President Obama says the economy will again shrink in the second quarter of this year — that’s the period we’re in now.

But Achuthan’s declaration doesn’t really counter that. He doesn’t think recovery will start until the third quarter -– sometime after June. So if this recession really does end this summer, now may be the time to start planning for an economic recovery that could be closer at hand.

Here are some questions I want to ask:

1) Will you spend more? A sure sign of growing consumer confidence will be when the transport industry — trucking companies and express mail services — see a jump in shipping orders. That will be one of the early indicators that this recession is coming to an end.

2) What’s your investment strategy? If the recession is really ending soon, then this may be the time for Americans to think about re-engaging the stock market and look now at companies that stand to gain in a recovery.

3) Could the recovery be “jobless?” Jobs are always a “lagging indicator” in any economic recovery, and the longer that takes, the more businesses try to improve productivity with fewer workers.

And, how do you have a recovery if job losses continue? The Labor Department says 6.3 million people are now drawing unemployment benefits -– that’s a record.

And, a number greater than that are unemployed but not collecting benefits, because their benefits have run out. ECRI’s Achuthan worries that during a recession, we all become more productive, by working with less (we fill in when our colleagues are laid-off, for instance), and so you don’t need to hire all of those people back for the economy to recover.

The danger of that is that many millions of people who have lost their jobs may not get them back in this economy -– and that can create great disparity in society -– “haves” who have more; “have nots” who have less.

Ali Velshi is CNN’s Business Correspondent