Tuesday, August 31, 2010

Obama Administration Plans Loans for Mortgage Aid

The Obama administration has been concerned since the day they took office and implemented multiple bail-out programs designed to stem the tide of home foreclosures and provide a much-needed boost to housing sales.

The Obama administration, seemingly at a loss for fresh solutions to jump-start the nation's moribund economy plans to sink millions more dollars into the housing market to help unemployed homeowners keep their homes by providing refinance assistance.

The administration will begin a Federal Housing Administration refinancing effort to help borrowers who are struggling to pay their home mortgages, and will start an emergency homeowners’ loan program for unemployed borrowers so they can stay in their homes, Mr. Donovan said on “State of the Union” on CNN.

Despite the nation's unemployment rate frozen at 9.5% and countless others out of work for longer than 26 weeks, the administration is hell-bent on beginning a Federal Housing Authority refinance program in an effort to keep folks struggling to pay their mortgages in their houses, while starting an emergency loan program for the unemployed.

While it is admirable that the administration would like to keep as many unemployed folks in their homes as possible---selling the notion that it is to help the unemployed----it is far more likely that in doing so, they hope to manage the number of homes currently in default, thus preventing them from piling on to the existing record number of foreclosures.

No matter how many times a loan is modified or re-written for anyone, under any circumstances who remains out of work and unable to generate income, all that is happening is the postponement of the inevitable. It doesn't take an M.B.A. from the Wharton School of Economics to figure out that any stipulated monthly payment will default with the absence of income.

To view full articles visit Examiner.com and The New York Times

Mortgage rates hitting record lows

The 15-year fixed-rate mortgage hit a record low of 3.86 percent last week. And a one-year adjustable-rate mortgage averaged 3.52 percent, more than a percentage point lower than a year ago, according to Freddie Mac.

Today’s mortgage rates are the lowest recorded since Freddie Mac, a government-controlled firm, started monitoring mortgage rate back in 1971. The average 30-year fixed mortgage is around 4.375% today, with an APR of 4.559%, down from Friday’s average of 4.36% and and 5.14 percent from last year.

Are you a current homeowner? If you haven’t refinanced your mortgage in the last year or two, does it make sense to do so now? One of the first things to do before you make any decision is to examine your own credit history, credit score, and your payment history, especially over the last two years. If you’re consistently on time with your current mortgage payments, credit card payments, auto loans, etc., then you’re in excellent shape. But even just one or two late payments can impact your credit grade. Lenders will also look at your overall debt situation.

One other key piece of information for refinancing is the “loan-to-value” ratio. It’s simply the amount you’re borrowing as a percentage of the home’s value. So if you want to refinance $75,000 on a home worth $150,000, your loan-to-value ratio is 50 percent. In general, a lower ratio means a lower mortgage rate.

We haven’t seen rates this low for, well, for forever — not since anyone has been tracking mortgage rates here in the U.S. If you plan to stay in your home for five years or more and haven’t refinanced already, it’s probably to your advantage to refinance now. If you’re not sure, ask a lender to run the numbers for you.

Try to keep your mortgage payoff date roughly the same as your current mortgage with any refinancing option you consider. So if you are 10 years into a 30-year mortgage, try to refinance with a term no longer than 20 years. Doing so will help to lower the overall interest costs on your loan.

You may be able to benefit greatly by refinancing your current mortgage. If you are paying more than 1 point over the current offered rate, you should absolutely consider refinancing your existing mortgages. Through refinancing, many borrowers are able to save thousands of dollars in interest payments over the total life of the mortgage, and many can save hundreds of dollars in monthly mortgage payments.

Tuesday, August 24, 2010

Real Estate Market: Priced to Buy

According to RealtyTrac, a total of 1.65 million U.S. properties received foreclosure filings during the first half of 2010. As of March, U.S. banks had an inventory of approximately 1.1 million foreclosed homes, which was up 20 percent from a year ago. Somehow U.S. banks have to get rid of this giant mountain of homes. Needless to say, this is going to have a significant depressing effect on housing prices.

The truth is that this is not a short-term downturn in the housing market. During the past two decades, an insane amount of debt fueled an artificial housing bubble that drove home prices to ridiculous levels. Now the U.S. housing market is trying to correct itself, and no matter how many trillions of dollars the U.S. government throws at the problem the fundamentals of the marketplace are still going to have their way eventually. According to Business Insider.com Michigan has 38.5% of the mortgages are underwater.

Now is the right time to bargain for a better price. The housing market has options across all categories: affordable, mid-income and luxury homes. The spurt of launches in the real estate market is not news anymore. With new names getting added to the list every month, there's already a supply glut. And, the pertinent question now is whether it makes sense to buy a house at this point. The basic law of demand and supply tells us that when supply goes up, the prices should fall. According to Trading Market.com when the market started recovering towards the end of 2009, developers gradually moved from affordable housing to mid-income housing, according to data available with PropEquity Analytics Pvt. Ltd, a Gurgaon-based property consultancy firm. In fact, in the last six months, the shift has become more pronounced with quite a few launches in the premium and luxury segments.

Real Estate Contract Conditions You Should Have

When you formally make an offer on a home you want to buy, you'll fill out a lot of paperwork specifying the terms of your offer. Aside from the obvious things like the address and purchase price of the property on which you're making an offer, here are some items you should be sure to include in your real estate purchase contract. Even though these forms are common and standardized and a good real estate agent would not let you leave anything important out of your contract, it is still a good idea to educate yourself about the key components of a real estate purchase agreement.

Finance Terms
If you are like most people and you won't be able to buy the home without obtaining a mortgage, your purchase offer should state that your offer is contingent upon obtaining financing at a specified interest rate.

Seller Assist
If you want the seller to pay part or all of your closing costs, you must ask for it in your offer. The offer should state the amount of closing costs you are requesting as a dollar amount (e.g., $6,000) or as a percentage of the home's purchase price (e.g., 3%).

Who Pays Specific Closing Costs
The agreement should specify whether the buyer or seller will pay for each of the common fees associated with the home purchase, such as escrow fees, title search fees, title insurance, notary fees, recording fees, transfer tax and so on. Your real estate agent can advise you as to whether it is the buyer or seller who customarily pays each of these fees in your area.

Home Inspection
Unless you are buying a tear-down, you should include a home inspection contingency in your offer. This clause allows you to walk away from the deal if a home inspection reveals significant and/or expensive-to-repair flaws in the structure's condition. For example, if the home inspection reveals that the home needs a new roof at a cost of $15,000, the home inspection contingency would give you the option to walk away from the deal.

Fixtures and Appliances
If you want the refrigerator, dishwasher, stove, oven, washing machine or any other fixtures and appliances, do not rely on a verbal agreement with the seller and do not assume anything. Specify in the contract any fixtures and appliances that are to be included in the purchase.

Closing Date
How much time do you need to complete the purchase transaction? Common time frames are 30 days, 45 days and 60 days. Issues that can affect this time frame might include the seller's need to find a new home, the remaining term on your lease if you are currently renting, the amount of time you have to relocate if you are moving from a job, and so on. Occasionally, the buyer or seller might want a closing as short as two weeks, but it's difficult to remove all the contingencies and obtain all the necessary paperwork and funding in such a short time period.

Sale of Existing Home
If you are an existing homeowner and you will need the funds from the sale of that home to buy the home you are making an offer on, you should make your purchase offer contingent upon the sale of your current home. You should also provide a reasonable time frame for you to sell your home, such as 30 or 60 days. The seller of the property you're interested in is not going to want to take his property off the market indefinitely while you search for a buyer.

Acrticle found on SF Gate

For more information on purchasing a home contact the Andrea Crossman Group.

Friday, August 6, 2010

The Housing Market Stabilizes

Recovery in both real estate and employment has taken longer than we ever anticipated, and even though there are signs of stabilization in both areas, we are managing to a lower set of expectations for the foreseeable future. Underwater borrowers, along with continued high unemployment, remain the biggest threats to the housing recovery. At the end of last year, among all U.S. homes with a mortgage 24 percent were underwater. Those properties are mostly in California, Arizona, Florida, Michigan and Nevada.

It is predicted that home prices will decline into next year, Fannie Mae said, reversing earlier projections that the housing market would stabilize this year. After the expiration of the home buyer tax credits, transactions began falling immediately and were down to around 30,000 at the end of July. Although, foreclosures, though down from their 2009 highs, still average well over 300,000 homes per month. While it takes a record 461 days to complete a foreclosure, on average. Fannie Mae said that it expects its inventory of repossessed homes "to continue to increase significantly throughout 2010."

The market got a major lift from a federal tax credit for first-time home buyers, a program that spurred sales but is no longer available to new buyers, that boost did not ripple after the tax credit ended. The first-time home-buyer tax credit, which expired April 30, helped 2.5 million people buy a home, while the Home Affordable Modification Program, which helps borrowers modify mortgages rather than face foreclosure, is on pace to help 3 million to 4 million homeowners by 2012.

The rumors are continuing to grow louder that the Obama administration is planning to announce a massive stimulus via the housing market later this month. Earlier this week, the word was that the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac might subsidize mortgage refinancing at below-market interest rates. But today, a possibility is being talked about where the GSEs instead (or maybe also) forgive the principal on the underwater mortgages they own or guarantee.

Home prices, as best we can judge, have really flattened out in the last year. And while it is true that most economists expect a small dip from here largely as a consequence of the ending of the home buyer tax credit, the data does not show that at this particular stage.

Here's a look at the number of foreclosure filings since the Home Affordable Modification Program began its first trial modifications in March 2009. Permanent modification of loans began in July 2009.

For more information on purchasing a home please contact the Andrea Crossman Group.