Tuesday, September 15, 2009
Many mortgage modifications push payments .... higher
Tens of thousands of financially strapped homeowners who have asked lenders to lower their mortgage payments are instead winding up with higher monthly payments and larger debts on their homes. http://www.usatoday.com/money/economy/housing/2009-09-14-mortgage-modifications-not-helping_N.htm
Realtors® Urge Congress to Act Now to Extend Homebuyer Tax Credit
The National Association of Realtors® is calling upon its 1.2 million members to urge Congress to extend the successful homebuyer tax credit into next year.
Since its inception earlier this year, the $8,000 first-time homebuyer tax credit has brought 1.2 million new buyers into the market—350,000 of whom would not have purchased a home without the credit, according to NAR. The credit is due to expire November 30.
“Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers. We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns, and can do so again,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth.
Realtors®, the leading advocates for homeownership and housing issues, will be writing to their Senators and Representatives to tell them of the successes with the tax credit thus far and to press them to extend and expand it now.
McMillan added that the market has improved, but it has not yet fully corrected itself. “The credit needs to be available for an additional period of time in order to sustain the progress that’s been made so we can continue to see our markets fully recover. Uncertainty about the future of the credit will dampen consumer demand. The only way we can assure that the progress we've made can continue is to extend the credit and to do that now,” he said.
As the current deadline for the credit looms, potential homebuyers need to complete a contract, satisfy any contingencies, secure financing and go to closing by November 30. In today’s market, NAR estimates that it generally is taking between 45 and 60 days from contract to closing.
“That means potential homebuyers who qualify must act now, and so must Congress,” McMillan said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
###
Since its inception earlier this year, the $8,000 first-time homebuyer tax credit has brought 1.2 million new buyers into the market—350,000 of whom would not have purchased a home without the credit, according to NAR. The credit is due to expire November 30.
“Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers. We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns, and can do so again,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth.
Realtors®, the leading advocates for homeownership and housing issues, will be writing to their Senators and Representatives to tell them of the successes with the tax credit thus far and to press them to extend and expand it now.
McMillan added that the market has improved, but it has not yet fully corrected itself. “The credit needs to be available for an additional period of time in order to sustain the progress that’s been made so we can continue to see our markets fully recover. Uncertainty about the future of the credit will dampen consumer demand. The only way we can assure that the progress we've made can continue is to extend the credit and to do that now,” he said.
As the current deadline for the credit looms, potential homebuyers need to complete a contract, satisfy any contingencies, secure financing and go to closing by November 30. In today’s market, NAR estimates that it generally is taking between 45 and 60 days from contract to closing.
“That means potential homebuyers who qualify must act now, and so must Congress,” McMillan said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
###
Thursday, September 10, 2009
Homebuyers Paid $7,039 Less!!!
Buyers in the Driver's Seat: U.S. Homebuyers Paid $7,039 Less Than Listing Price in July
Florida Markets Make Up 14 of Top 25 Markets Where Buyers Can Negotiate, According to July Zillow® Real Estate Market Reports
SEATTLE, Sept. 10 /PRNewswire/ -- Amid continued falling home prices, U.S. homebuyers are negotiating even more discounts at the bargaining table, according to July's Zillow Real Estate Market Reports. Buyers paid 3.3 percent, or a nearly $7,039, less than the last listing price on homes for sale(1) during the month of July. That is down slightly from 3.5 percent, or $7,630, in June, and substantially down from 4.6 percent ($10,260) in January.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060503/ZILLOWLOGO)
Meanwhile, 22.8 percent of all homes listed for sale on Zillow had at least one listing price reduction(2) as of Sept. 1, 2009. The median U.S. price reduction(3) was 6.5 percent off the original listing price. Homes listed for sale on Zillow during August were listed for a median 96 days(4), up from 91 in July.
Florida homebuyers had the most negotiating power in July, with buyers in the Vero Beach metropolitan statistical area (MSA) paying 10.2 percent, or a median $23,500, less than the last listing price. Buyers in the Sarasota MSA paid 8.2 percent less than list price. The Naples, Daytona Beach, Miami-Fort Lauderdale, Panama City, Punta Gorda, Melbourne, Ocala, Tampa, Jacksonville, Port St. Lucie, Gainesville and Lakeland MSAs also ranked, in that order, in the top 25 markets for negotiation.
There was less or no room for negotiation in some California markets that have been hard-hit by foreclosures. In the El Centro MSA, buyers paid 1.8 percent, or a median of $2,150, more than the listing price. In seven California markets -- Sacramento, Merced, Modesto, Riverside, Stockton, Yuba City and Fresno -- asking price and sale price were the same
(5)."The strong summer selling season in 2009 has led to a decreasing difference between the last listing price and final sale price, but most buyers are still getting some additional discount at selling time," said Zillow Chief Economist Dr. Stan Humphries. "We expected list-to-sale price ratios to fall as the sales volume picked up during the summer, and the California markets are showing strong declines in the discount off the last listing price, relative to levels at the start of the year. This is fueled both by increased sales and high proportion of foreclosures re-sales, which are already priced relatively low.
"The fact that many Florida markets are still showing comparatively higher differences between the last listing price and final sale price suggests that inventory levels are still relatively high, keeping considerable downward pressure on prices and encouraging buyers to seek large discounts off the listing price. Overall, buyers are finding favorable conditions for negotiating prices, and now can be a good time to buy, provided homebuyers are financially prepared with healthy down payments and intend to stay in their home for a minimum of five to seven years."
Top 25 Markets for Negotiating Discounts (ranked by percent difference from last list price to final sale)
Zillow
Median % Median $ Home
Difference Difference Value
from from % of Index Median
Last List For Sale Year- Days
List Price Price Listings Median % Over- Listed
Metropolitan to Final to Final with Price of Price Year on
Statistical Sale Sale Reductions Reduction Change Zillow
Area (1) (1) (2) (6) (4)
United States 3.3% $7,039 22.8% 6.5% -9.9% 96
Vero Beach,
Fla. 10.2% $23,500 17.5% 9.1% -11.6% 106
Sarasota, Fla. 8.2% $20,392 19.9% 8.3% -17.5% 96
Atlantic City,
N.J. 8% $23,082 21.4% 6.9% -7.4% 94
Naples, Fla. 7.8% $27,233 21.1% 9.8% -21.2% 100
Daytona Beach,
Fla. 7.5% $14,246 23.8% 9.2% -22.3% 129
Miami-
Ft. Lauderdale,
Fla. 7.5% $18,658 18.7% 11.4% -20.7% 109
Panama City,
Fla. 7.1% $17,617 19.8% 9.8% -10.3% 135
Punta Gorda,
Fla. 7% $11,677 16% 10.5% -14.3% 145
Melbourne, Fla. 6.6% $11,839 20.9% 8.5% -18.3% 125
Detroit, Mich. 6.5% $7,777 29.1% 10.7% -24% 69
Ocala, Fla. 6.4% $8,960 21.2% 10.5% -12.2% 74
Springfield,
Ohio 6.4% $6,231 21.8% 8% -1.8% 101
Prescott, Ariz. 6.4% $15,919 28.6% 8.7% -19.3% 120
Morristown,
Tenn. 6.3% $11,233 18.9% 6.3% -15.9% 143
Toledo, Ohio 6.1% $7,315 24.8% 7.7% -7.1% 109
Tampa, Fla. 6.1% $10,948 22.8% 9% -19.8% 106
Jacksonville,
Fla. 6% $12,313 29% 7.9% -13% 111
Stamford,
Conn. 5.9% $32,099 26.5% 5.8% -10.4% 110
Port St. Lucie,
Fla. 5.7% $10,289 19.5% 10% -24.5% 124
Grand Rapids, Mich. 5.6% $6,879 24% 8% -10.8% 101
Chicago, Ill. 5.5% $13,453 29.4% 6% -13% 108
Gainesville,
Fla. 5.5% $9,868 22.1% 6.7% -8.7% 130
Lakeland, Fla. 5.5% $8,757 17.3% 9.4% -23.4% 111
New York, N.Y. 5.4% $21,785 25% 5.9% -9.7% 110
Cleveland,
Ohio 5.4% $7,424 25.4% 6.7% -5.3% 86
The full national report for 161 MSAs, in its new, interactive format, is available at www.zillow.com/local-info, or by emailing press@zillow.com. Additionally, in most areas data is available at the state, metro, county, city, ZIP and neighborhood level.
About Zillow.com®
Zillow.com is an online real estate marketplace where homeowners, buyers, sellers, real estate agents and mortgage professionals find and share vital information about homes and mortgages, for free. Launched in early 2006 with Zestimate® home values and data on millions of U.S. homes, Zillow has since added homes for sale, a directory of real estate and lending professionals, Zillow Advice and Zillow Mortgage Marketplace. One of the most-visited U.S. real estate Web sites, with more than eight million unique visitors per month, Zillow's goal is to help people become smarter about real estate in every stage of the home ownership process -- home buying, selling, remodeling and financing. The company is headquartered in Seattle and has raised $87 million in funding.
Zillow.com, Zillow and Zestimate are registered trademarks of Zillow, Inc.
List-to-sale price ratio is the median between the most previous list price and the final sale price of the home for all Zillow listings in a given geography. Foreclosed homes are included if they were listed as for-sale on Zillow prior to the foreclosure. The dollar amount is the median price of all listings on Zillow during a month multiplied by the inverse of the list-to-sale price ratio (sale-to-list price ratio). List-to-sale price ratio is calculated for July.
Listings with price reduction are the percent of for-sale listings on Zillow that, during August, had a reduced listing price compared with the maximum listing price of the preceding three months.
The median percent of price reduction measures the median amount of all price reductions in the listing price of for-sale homes that had a reduced price during August, compared with the maximum list price in the last three months.
"Days listed on Zillow" is measured as the median number of days for-sale homes are listed. To be included in this data point, a home must have been listed for sale on Zillow for at least one day during the reporting period (August).
"Same" means +/-1%.
The Zillow Home Value Index is the median estimated value (Zestimate) of all homes in an area. This measures the change of the Zillow Home Value Index from July 2008 to July 2009.
Florida Markets Make Up 14 of Top 25 Markets Where Buyers Can Negotiate, According to July Zillow® Real Estate Market Reports
SEATTLE, Sept. 10 /PRNewswire/ -- Amid continued falling home prices, U.S. homebuyers are negotiating even more discounts at the bargaining table, according to July's Zillow Real Estate Market Reports. Buyers paid 3.3 percent, or a nearly $7,039, less than the last listing price on homes for sale(1) during the month of July. That is down slightly from 3.5 percent, or $7,630, in June, and substantially down from 4.6 percent ($10,260) in January.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060503/ZILLOWLOGO)
Meanwhile, 22.8 percent of all homes listed for sale on Zillow had at least one listing price reduction(2) as of Sept. 1, 2009. The median U.S. price reduction(3) was 6.5 percent off the original listing price. Homes listed for sale on Zillow during August were listed for a median 96 days(4), up from 91 in July.
Florida homebuyers had the most negotiating power in July, with buyers in the Vero Beach metropolitan statistical area (MSA) paying 10.2 percent, or a median $23,500, less than the last listing price. Buyers in the Sarasota MSA paid 8.2 percent less than list price. The Naples, Daytona Beach, Miami-Fort Lauderdale, Panama City, Punta Gorda, Melbourne, Ocala, Tampa, Jacksonville, Port St. Lucie, Gainesville and Lakeland MSAs also ranked, in that order, in the top 25 markets for negotiation.
There was less or no room for negotiation in some California markets that have been hard-hit by foreclosures. In the El Centro MSA, buyers paid 1.8 percent, or a median of $2,150, more than the listing price. In seven California markets -- Sacramento, Merced, Modesto, Riverside, Stockton, Yuba City and Fresno -- asking price and sale price were the same
(5)."The strong summer selling season in 2009 has led to a decreasing difference between the last listing price and final sale price, but most buyers are still getting some additional discount at selling time," said Zillow Chief Economist Dr. Stan Humphries. "We expected list-to-sale price ratios to fall as the sales volume picked up during the summer, and the California markets are showing strong declines in the discount off the last listing price, relative to levels at the start of the year. This is fueled both by increased sales and high proportion of foreclosures re-sales, which are already priced relatively low.
"The fact that many Florida markets are still showing comparatively higher differences between the last listing price and final sale price suggests that inventory levels are still relatively high, keeping considerable downward pressure on prices and encouraging buyers to seek large discounts off the listing price. Overall, buyers are finding favorable conditions for negotiating prices, and now can be a good time to buy, provided homebuyers are financially prepared with healthy down payments and intend to stay in their home for a minimum of five to seven years."
Top 25 Markets for Negotiating Discounts (ranked by percent difference from last list price to final sale)
Zillow
Median % Median $ Home
Difference Difference Value
from from % of Index Median
Last List For Sale Year- Days
List Price Price Listings Median % Over- Listed
Metropolitan to Final to Final with Price of Price Year on
Statistical Sale Sale Reductions Reduction Change Zillow
Area (1) (1) (2) (6) (4)
United States 3.3% $7,039 22.8% 6.5% -9.9% 96
Vero Beach,
Fla. 10.2% $23,500 17.5% 9.1% -11.6% 106
Sarasota, Fla. 8.2% $20,392 19.9% 8.3% -17.5% 96
Atlantic City,
N.J. 8% $23,082 21.4% 6.9% -7.4% 94
Naples, Fla. 7.8% $27,233 21.1% 9.8% -21.2% 100
Daytona Beach,
Fla. 7.5% $14,246 23.8% 9.2% -22.3% 129
Miami-
Ft. Lauderdale,
Fla. 7.5% $18,658 18.7% 11.4% -20.7% 109
Panama City,
Fla. 7.1% $17,617 19.8% 9.8% -10.3% 135
Punta Gorda,
Fla. 7% $11,677 16% 10.5% -14.3% 145
Melbourne, Fla. 6.6% $11,839 20.9% 8.5% -18.3% 125
Detroit, Mich. 6.5% $7,777 29.1% 10.7% -24% 69
Ocala, Fla. 6.4% $8,960 21.2% 10.5% -12.2% 74
Springfield,
Ohio 6.4% $6,231 21.8% 8% -1.8% 101
Prescott, Ariz. 6.4% $15,919 28.6% 8.7% -19.3% 120
Morristown,
Tenn. 6.3% $11,233 18.9% 6.3% -15.9% 143
Toledo, Ohio 6.1% $7,315 24.8% 7.7% -7.1% 109
Tampa, Fla. 6.1% $10,948 22.8% 9% -19.8% 106
Jacksonville,
Fla. 6% $12,313 29% 7.9% -13% 111
Stamford,
Conn. 5.9% $32,099 26.5% 5.8% -10.4% 110
Port St. Lucie,
Fla. 5.7% $10,289 19.5% 10% -24.5% 124
Grand Rapids, Mich. 5.6% $6,879 24% 8% -10.8% 101
Chicago, Ill. 5.5% $13,453 29.4% 6% -13% 108
Gainesville,
Fla. 5.5% $9,868 22.1% 6.7% -8.7% 130
Lakeland, Fla. 5.5% $8,757 17.3% 9.4% -23.4% 111
New York, N.Y. 5.4% $21,785 25% 5.9% -9.7% 110
Cleveland,
Ohio 5.4% $7,424 25.4% 6.7% -5.3% 86
The full national report for 161 MSAs, in its new, interactive format, is available at www.zillow.com/local-info, or by emailing press@zillow.com. Additionally, in most areas data is available at the state, metro, county, city, ZIP and neighborhood level.
About Zillow.com®
Zillow.com is an online real estate marketplace where homeowners, buyers, sellers, real estate agents and mortgage professionals find and share vital information about homes and mortgages, for free. Launched in early 2006 with Zestimate® home values and data on millions of U.S. homes, Zillow has since added homes for sale, a directory of real estate and lending professionals, Zillow Advice and Zillow Mortgage Marketplace. One of the most-visited U.S. real estate Web sites, with more than eight million unique visitors per month, Zillow's goal is to help people become smarter about real estate in every stage of the home ownership process -- home buying, selling, remodeling and financing. The company is headquartered in Seattle and has raised $87 million in funding.
Zillow.com, Zillow and Zestimate are registered trademarks of Zillow, Inc.
List-to-sale price ratio is the median between the most previous list price and the final sale price of the home for all Zillow listings in a given geography. Foreclosed homes are included if they were listed as for-sale on Zillow prior to the foreclosure. The dollar amount is the median price of all listings on Zillow during a month multiplied by the inverse of the list-to-sale price ratio (sale-to-list price ratio). List-to-sale price ratio is calculated for July.
Listings with price reduction are the percent of for-sale listings on Zillow that, during August, had a reduced listing price compared with the maximum listing price of the preceding three months.
The median percent of price reduction measures the median amount of all price reductions in the listing price of for-sale homes that had a reduced price during August, compared with the maximum list price in the last three months.
"Days listed on Zillow" is measured as the median number of days for-sale homes are listed. To be included in this data point, a home must have been listed for sale on Zillow for at least one day during the reporting period (August).
"Same" means +/-1%.
The Zillow Home Value Index is the median estimated value (Zestimate) of all homes in an area. This measures the change of the Zillow Home Value Index from July 2008 to July 2009.
Wednesday, September 9, 2009
New normal for home sales: Buyers have the power!!!!
The American dream of homeownership is still attainable. Buyers just have to deal with a new set of realities.
A year after the collapse of the housing market triggered the financial meltdown, lenders are demanding more money up front, high credit scores and proof of income. Paperwork must be in perfect order. Patience and persistence are required. And don't even bother asking about a subprime mortgage.
It's a vastly different set of rules from earlier this decade, when home prices soared and mortgages were easy to come by.
In some ways, it's a return to the standards that emerged as the World War II generation bought its first homes in the suburbs: Buy what you can afford. Stick to a 30-year, fixed-rate mortgage. View your home as a place to live, not as a piggy bank.
For people trying to sell their homes, the standards are different, too: Be patient and maybe even lower your asking price, because the balance of power has swung strongly to buyers.
Housing bubbles have happened before and, experts warn, could happen again. Already, home sales and prices are rising slowly, helped by tax breaks for first-time homebuyers. But real estate agents, mortgage brokers, economists and homebuyers across the country say they've noticed a shift in attitudes that they expect will last for years.
NEW REALITY: Selling your house
Real estate agent Scott Patterson hits the gas and weaves his black Mercedes-Benz across three lanes of Interstate 95 near Plantation, Fla., holding his iPhone with one hand and the steering wheel with the other.
He is rushing to meet with potential buyers of a condo with an ocean view. When he arrives, he turns on lights and opens doors in the four-bedroom place. The prospective buyers, a couple from Venezuela, walk around, ask a few questions — and leave.
Business may be up in South Florida, but the power has shifted to the buyer. And price is the key. "If you're not getting showings, you're overpriced," says Patterson, an agent with Esslinger Wooten Maxwell Realtors Inc.
The record number of foreclosed homes on the market gives buyers even more leverage. "They can afford to wait," says David Baran, a broker with Prudential Preferred Properties in Chicago.
Michael Davies and Nicole Anzia of Washington, D.C., got caught in their first bidding war when they bought their two-bedroom condo in 2003. The seller fielded eight bids within five days of listing. The couple waived an inspection to clinch the deal and paid $372,000.
That was tame compared with what happened when they sold the condo two years later. They listed the property on a Thursday for $479,000 and held two open houses. More than 100 people showed up, and 11 bids were waiting for them by Tuesday. The final price: $605,000. The buyer waived the inspection, too.
When they tried to sell their home this May, things were different. They listed the house at the purchase price and received just one bid. The negotiation process took longer, and they sold at a $21,000 loss. The buyer demanded an inspection.
"We don't feel like we went from boom to bust," Davies says. "We felt like we went from boom to reality."
NEW REALITY: Getting a mortgage
Jim Sahnger, a mortgage broker in Jupiter, Fla., still chuckles over one borrower three years ago who landed a mortgage with no down payment and two foreclosures and a bankruptcy in his past.
Now, lenders pore over bank statements, tax returns and job histories. The average mortgage application today starts three times thicker than what it was at the start of the housing boom, and often gets thicker as the process drags on.
Sometimes all the extra documentation still isn't enough. Sahnger recently had a customer with a good job and a 20 percent down payment who couldn't get a mortgage because the lender said there were too many delinquent mortgages in the neighborhood.
"Now, they want to know everything about the buyer," Sahnger says. "It's a true and full underwriting process on every particular loan."
— sometimes more. And it is virtually impossible to get subprime mortgages, which were written for people with poor credit histories and helped cause the meltdown when the interest rates jumped and borrowers defaulted. In 2005, one in every five mortgages was considered subprime. This year, it's less than 1 percent.
Another category of risky loans, Alt-A mortgages, which required little or no documentation of the borrower's financial health, have plunged to $3 billion this year from $400 billion in 2005.
NEW REALITY: Closing the deal
Mike Delano thought everything was in order. He was set to buy a $785,000 home in Washington, D.C., until he learned his lender now required a 20 percent down payment instead of 10 percent.
Unlike in years past, there was no wiggle room. He had to raise the extra money from his family. "It was a nightmare," he says.
It's not uncommon nowadays for closings to take 60 days. One big reason: Appraisers have become more strict — or, some would say, more accurate.
During the boom years, agents and brokers often pressured appraisers to "hit the number" that the buyer and seller had agreed on so the deal would close and everyone could collect fees.
Under new industry rules, mortgage brokers are barred from ordering appraisals themselves. Instead, lenders order appraisals in-house or hire independent firms.
Some real estate agents and homebuilders say the rules are causing delays in closing sales, or undermining sales because appraisals are coming in too low.
NEW REALITY: The future
Nearly everyone in the real estate industry agrees on this much: Another dramatic boom-bust cycle isn't likely soon. Albert Saiz, assistant real estate professor at the University of Pennsylvania's Wharton School, expects that new regulations and a different consumer mindset will help real estate return to a more traditional cycle.
There will be some ups and downs, Saiz said, but in the long run, prices should move higher. "In the end, the United States is still growing," he says. "We're going to need more housing."
Pava Leyrer, president of Heritage National Mortgage in Michigan, notes that the majority of people are still paying their debts. She's confident the market will rebound once the unemployment rate begins to fall.
"I really can't imagine we would go back to the same situation because it took an exact wrong mix of everything for that to occur," she says. "If it ever did happen, I'll be long dead."
A year after the collapse of the housing market triggered the financial meltdown, lenders are demanding more money up front, high credit scores and proof of income. Paperwork must be in perfect order. Patience and persistence are required. And don't even bother asking about a subprime mortgage.
It's a vastly different set of rules from earlier this decade, when home prices soared and mortgages were easy to come by.
In some ways, it's a return to the standards that emerged as the World War II generation bought its first homes in the suburbs: Buy what you can afford. Stick to a 30-year, fixed-rate mortgage. View your home as a place to live, not as a piggy bank.
For people trying to sell their homes, the standards are different, too: Be patient and maybe even lower your asking price, because the balance of power has swung strongly to buyers.
Housing bubbles have happened before and, experts warn, could happen again. Already, home sales and prices are rising slowly, helped by tax breaks for first-time homebuyers. But real estate agents, mortgage brokers, economists and homebuyers across the country say they've noticed a shift in attitudes that they expect will last for years.
NEW REALITY: Selling your house
Real estate agent Scott Patterson hits the gas and weaves his black Mercedes-Benz across three lanes of Interstate 95 near Plantation, Fla., holding his iPhone with one hand and the steering wheel with the other.
He is rushing to meet with potential buyers of a condo with an ocean view. When he arrives, he turns on lights and opens doors in the four-bedroom place. The prospective buyers, a couple from Venezuela, walk around, ask a few questions — and leave.
Business may be up in South Florida, but the power has shifted to the buyer. And price is the key. "If you're not getting showings, you're overpriced," says Patterson, an agent with Esslinger Wooten Maxwell Realtors Inc.
The record number of foreclosed homes on the market gives buyers even more leverage. "They can afford to wait," says David Baran, a broker with Prudential Preferred Properties in Chicago.
Michael Davies and Nicole Anzia of Washington, D.C., got caught in their first bidding war when they bought their two-bedroom condo in 2003. The seller fielded eight bids within five days of listing. The couple waived an inspection to clinch the deal and paid $372,000.
That was tame compared with what happened when they sold the condo two years later. They listed the property on a Thursday for $479,000 and held two open houses. More than 100 people showed up, and 11 bids were waiting for them by Tuesday. The final price: $605,000. The buyer waived the inspection, too.
When they tried to sell their home this May, things were different. They listed the house at the purchase price and received just one bid. The negotiation process took longer, and they sold at a $21,000 loss. The buyer demanded an inspection.
"We don't feel like we went from boom to bust," Davies says. "We felt like we went from boom to reality."
NEW REALITY: Getting a mortgage
Jim Sahnger, a mortgage broker in Jupiter, Fla., still chuckles over one borrower three years ago who landed a mortgage with no down payment and two foreclosures and a bankruptcy in his past.
Now, lenders pore over bank statements, tax returns and job histories. The average mortgage application today starts three times thicker than what it was at the start of the housing boom, and often gets thicker as the process drags on.
Sometimes all the extra documentation still isn't enough. Sahnger recently had a customer with a good job and a 20 percent down payment who couldn't get a mortgage because the lender said there were too many delinquent mortgages in the neighborhood.
"Now, they want to know everything about the buyer," Sahnger says. "It's a true and full underwriting process on every particular loan."
— sometimes more. And it is virtually impossible to get subprime mortgages, which were written for people with poor credit histories and helped cause the meltdown when the interest rates jumped and borrowers defaulted. In 2005, one in every five mortgages was considered subprime. This year, it's less than 1 percent.
Another category of risky loans, Alt-A mortgages, which required little or no documentation of the borrower's financial health, have plunged to $3 billion this year from $400 billion in 2005.
NEW REALITY: Closing the deal
Mike Delano thought everything was in order. He was set to buy a $785,000 home in Washington, D.C., until he learned his lender now required a 20 percent down payment instead of 10 percent.
Unlike in years past, there was no wiggle room. He had to raise the extra money from his family. "It was a nightmare," he says.
It's not uncommon nowadays for closings to take 60 days. One big reason: Appraisers have become more strict — or, some would say, more accurate.
During the boom years, agents and brokers often pressured appraisers to "hit the number" that the buyer and seller had agreed on so the deal would close and everyone could collect fees.
Under new industry rules, mortgage brokers are barred from ordering appraisals themselves. Instead, lenders order appraisals in-house or hire independent firms.
Some real estate agents and homebuilders say the rules are causing delays in closing sales, or undermining sales because appraisals are coming in too low.
NEW REALITY: The future
Nearly everyone in the real estate industry agrees on this much: Another dramatic boom-bust cycle isn't likely soon. Albert Saiz, assistant real estate professor at the University of Pennsylvania's Wharton School, expects that new regulations and a different consumer mindset will help real estate return to a more traditional cycle.
There will be some ups and downs, Saiz said, but in the long run, prices should move higher. "In the end, the United States is still growing," he says. "We're going to need more housing."
Pava Leyrer, president of Heritage National Mortgage in Michigan, notes that the majority of people are still paying their debts. She's confident the market will rebound once the unemployment rate begins to fall.
"I really can't imagine we would go back to the same situation because it took an exact wrong mix of everything for that to occur," she says. "If it ever did happen, I'll be long dead."
Obama admin: foreclosure prevention effort on track!!!!
WASHINGTON (Reuters) – The number of troubled U.S. homeowners benefiting from loan modification efforts under an Obama administration plan increased by about one-third last month, a senior official said.
In testimony prepared for delivery at a congressional hearing on Wednesday, Federal Housing Administration Commissioner Dave Stevens said about 360,000 borrowers had seen their monthly payments lowered under the plan.
A month ago the U.S. Treasury Department had put that figure at about 230,000.
In all, mortgage servicers had extended more than 571,000 loan modification offers to date, up from about 400,000 reported through July, Stevens said.
The new figures put the program to combat rising U.S. home foreclosures on track to meet the administration's goal of modifying more than half a million delinquent mortgages by November 1, Stevens said.
Staunching the record number of home foreclosures is seen as a key to an economic recovery.
Administration officials have been frustrated by how few mortgages have been modified under the plan first announced in February.
They used a report on modification in early August, the first in a planned series of monthly reports, to put pressure on mortgage servicers to step up their efforts to help homeowners.
Under the government's Home Affordable Modification Program (HAMP), mortgage companies get $1,000 for each loan modification completed and additional cash for three years as long as the borrower stays current.
In the prepared testimony, Stevens said the administration was conducting a "high level review" of the housing rescue effort and was also exploring "programmatic options" to ensure signs of stabilization in the housing market are maintained.
Stevens warns of increasing evidence of "material and growing" challenges in the multifamily mortgage sector that could have negative consequences for tenants.
Mortgage Bankers Association data show that first-quarter 2009 delinquency rates among securities backed by multifamily mortgages rose dramatically from the year-ago quarter, Stevens said.
In testimony prepared for delivery at a congressional hearing on Wednesday, Federal Housing Administration Commissioner Dave Stevens said about 360,000 borrowers had seen their monthly payments lowered under the plan.
A month ago the U.S. Treasury Department had put that figure at about 230,000.
In all, mortgage servicers had extended more than 571,000 loan modification offers to date, up from about 400,000 reported through July, Stevens said.
The new figures put the program to combat rising U.S. home foreclosures on track to meet the administration's goal of modifying more than half a million delinquent mortgages by November 1, Stevens said.
Staunching the record number of home foreclosures is seen as a key to an economic recovery.
Administration officials have been frustrated by how few mortgages have been modified under the plan first announced in February.
They used a report on modification in early August, the first in a planned series of monthly reports, to put pressure on mortgage servicers to step up their efforts to help homeowners.
Under the government's Home Affordable Modification Program (HAMP), mortgage companies get $1,000 for each loan modification completed and additional cash for three years as long as the borrower stays current.
In the prepared testimony, Stevens said the administration was conducting a "high level review" of the housing rescue effort and was also exploring "programmatic options" to ensure signs of stabilization in the housing market are maintained.
Stevens warns of increasing evidence of "material and growing" challenges in the multifamily mortgage sector that could have negative consequences for tenants.
Mortgage Bankers Association data show that first-quarter 2009 delinquency rates among securities backed by multifamily mortgages rose dramatically from the year-ago quarter, Stevens said.
Mortgage Rates Fall, Boost Sales!!!!!
Interest rates on home mortgages dropped this week, with the 30-year fixed-rate mortgage averaging 5.08%, according to Freddie Mac's weekly survey of conforming mortgages.
The 30-year fixed-rate mortgage averaged 5.14% last week and 6.35% a year ago. Fifteen-year fixed-rate mortgages also dropped, averaging 4.54% for the week ending Sept. 3, down from 4.58% last week. The mortgage averaged 5.9% a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.59%, down from 4.67% last week and 5.97% a year ago. And one-year Treasury-indexed ARMs averaged 4.62%, down from 4.69% last week and from 5.15% a year ago.
"Bond yields pushed mortgage rates slightly lower this week," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. "Low mortgage rates are helping to keep housing very affordable."
Seven of the top eight most affordable months, as measured by the National Association of Realtors' Housing Affordability Index, have taken place during 2009, he said. The NAR's index dates back to 1971.
"As a result, pending sales of existing homes rose for the sixth month in a row in July, a trend unseen since the NAR began reporting data in 2001. Moreover, July's sales were the strongest since June 2007," Mr. Nothaft said.
The NAR's pending-home-sales index rose 3.2% for the month and came in 12% higher than July 2008, the Washington-based trade group reported on Monday.
In a separate release Wednesday, the Mortgage Bankers Association reported that mortgage applications were down a seasonally adjusted 2.2% for the week of Aug. 28 compared with the prior week.
The 30-year fixed-rate mortgage averaged 5.14% last week and 6.35% a year ago. Fifteen-year fixed-rate mortgages also dropped, averaging 4.54% for the week ending Sept. 3, down from 4.58% last week. The mortgage averaged 5.9% a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.59%, down from 4.67% last week and 5.97% a year ago. And one-year Treasury-indexed ARMs averaged 4.62%, down from 4.69% last week and from 5.15% a year ago.
"Bond yields pushed mortgage rates slightly lower this week," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. "Low mortgage rates are helping to keep housing very affordable."
Seven of the top eight most affordable months, as measured by the National Association of Realtors' Housing Affordability Index, have taken place during 2009, he said. The NAR's index dates back to 1971.
"As a result, pending sales of existing homes rose for the sixth month in a row in July, a trend unseen since the NAR began reporting data in 2001. Moreover, July's sales were the strongest since June 2007," Mr. Nothaft said.
The NAR's pending-home-sales index rose 3.2% for the month and came in 12% higher than July 2008, the Washington-based trade group reported on Monday.
In a separate release Wednesday, the Mortgage Bankers Association reported that mortgage applications were down a seasonally adjusted 2.2% for the week of Aug. 28 compared with the prior week.
CIC Looks to Pile Cash Into U.S. Real Estate
China's $300 billion sovereign-wealth fund is eyeing big investments in distressed U.S. real estate, according to people familiar with the matter. To finance some of the deals, China may rely on an old trading partner: the U.S. government.
In recent weeks, officials from China Investment Corp. have held talks with U.S. private-equity fund managers, including BlackRock Inc., Invesco Ltd. and Lone Star Funds, about potential investments in beaten-down property assets, namely mortgage securities backed by office buildings, hotels, strip malls and other commercial property. CIC also is considering buying ownership interests in buildings, according to the people with knowledge
In recent weeks, officials from China Investment Corp. have held talks with U.S. private-equity fund managers, including BlackRock Inc., Invesco Ltd. and Lone Star Funds, about potential investments in beaten-down property assets, namely mortgage securities backed by office buildings, hotels, strip malls and other commercial property. CIC also is considering buying ownership interests in buildings, according to the people with knowledge
Tuesday, September 1, 2009
July pending home sales rise to 2-year high!!!
WASHINGTON – A gauge of future U.S. home sales rose more than expected in July to the highest level in over two years as first-time buyers rushed to take advantage of a tax credit that expires this fall.
The report showed the housing market is rebounding faster than expected from its historic bust. Low prices and the looming expiration on Nov. 30 of a first-time homebuyers' tax credit of up to $8,000 have spurred sales. Prices in much of the country have begun to rise from the depths of the slump.
"The overall trend toward stabilization is undeniable at this point," wrote Mike Larson, real estate analyst at Weiss Research.
The National Association of Realtors said Tuesday its seasonally adjusted index of sales contracts signed in July for previously occupied homes rose 3.2 percent to 97.6. It was the sixth straight increase, and 12 percent higher the same month last year.
Economists surveyed by Thomson Reuters had expected the index to edge up to only 96.5.
The index of pending home sales indicates how sales completed this month and next will turn out. Typically, there is a one- to two-month lag between a contract and a final deal. But delays in getting mortgages approved and appraisals completed have recently lengthened the time it takes to close a deal in many cases.
Analysts predict sales will drop off when the tax credit expires, or if mortgage rates rise from near-record lows. Foreclosures also continue to rise, and banks are forced to sell those properties at deep discounts, pushing prices down.
A 12 percent jump in sales contracts in the West and a 3 percent increase in the South drove July's overall increase. Sales fell in the Northeast and Midwest.
The Realtors group projects that around 2 million first-time buyers will take advantage of the credit this year, and says it is spurring 350,000 additional sales that wouldn't have happened otherwise.
Nationally, home prices in the second quarter posted their first quarterly increase in three years, according to the Standard & Poor's/Case-Shiller national index released last week. Prices are growing in some parts of the country, but "beware a rise in supply as frustrated would-be sellers see their chance," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics.
While home prices are still 30 percent below the mid-2006 peak, their new direction should bring relief to lenders, homeowners and buyers alike.
Falling property values have wiped out $4 trillion in homeowners' equity, and thousands have walked away from homes that are worth far less than their mortgage balance. But now, with prices stabilizing, many buyers who had been staying out of the market are coming off the sidelines.
The report showed the housing market is rebounding faster than expected from its historic bust. Low prices and the looming expiration on Nov. 30 of a first-time homebuyers' tax credit of up to $8,000 have spurred sales. Prices in much of the country have begun to rise from the depths of the slump.
"The overall trend toward stabilization is undeniable at this point," wrote Mike Larson, real estate analyst at Weiss Research.
The National Association of Realtors said Tuesday its seasonally adjusted index of sales contracts signed in July for previously occupied homes rose 3.2 percent to 97.6. It was the sixth straight increase, and 12 percent higher the same month last year.
Economists surveyed by Thomson Reuters had expected the index to edge up to only 96.5.
The index of pending home sales indicates how sales completed this month and next will turn out. Typically, there is a one- to two-month lag between a contract and a final deal. But delays in getting mortgages approved and appraisals completed have recently lengthened the time it takes to close a deal in many cases.
Analysts predict sales will drop off when the tax credit expires, or if mortgage rates rise from near-record lows. Foreclosures also continue to rise, and banks are forced to sell those properties at deep discounts, pushing prices down.
A 12 percent jump in sales contracts in the West and a 3 percent increase in the South drove July's overall increase. Sales fell in the Northeast and Midwest.
The Realtors group projects that around 2 million first-time buyers will take advantage of the credit this year, and says it is spurring 350,000 additional sales that wouldn't have happened otherwise.
Nationally, home prices in the second quarter posted their first quarterly increase in three years, according to the Standard & Poor's/Case-Shiller national index released last week. Prices are growing in some parts of the country, but "beware a rise in supply as frustrated would-be sellers see their chance," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics.
While home prices are still 30 percent below the mid-2006 peak, their new direction should bring relief to lenders, homeowners and buyers alike.
Falling property values have wiped out $4 trillion in homeowners' equity, and thousands have walked away from homes that are worth far less than their mortgage balance. But now, with prices stabilizing, many buyers who had been staying out of the market are coming off the sidelines.
Monday, August 31, 2009
What to do if your mortgage is sold to another lender
The practice is very common, and such transfers normally take place without a hitch. But you need to make sure the rightful loan servicer receives your payments.
Reporting from Washington - It's the mortgage market's equivalent of a Dear John letter: "Goodbye. We've sold your loan to another lender."Some borrowers receive the missive a few days after they close on their loans. Sometimes it arrives years later. But over the life of the mortgage, practically every homeowner is sure to receive one. The loan may be sold two, three or even four times to other lenders.In mortgage-industry parlance, it's called a "transfer of servicing." But although some borrowers may take the notice as a personal affront, it's really nothing to fret about."People shouldn't take it personally," said Alan Jones, senior vice president for servicing at Wells Fargo Home Mortgage in Des Moines. "It doesn't have anything to do with anything they have done. It's a standard business practice."Wells Fargo is one of the few lenders that rarely transfers the servicing rights to the loans it originates. Otherwise, the practice is very common. Full story!!
http://www.latimes.com/classified/realestate/news/la-fi-lew23-2009aug23,0,714106.story
Reporting from Washington - It's the mortgage market's equivalent of a Dear John letter: "Goodbye. We've sold your loan to another lender."Some borrowers receive the missive a few days after they close on their loans. Sometimes it arrives years later. But over the life of the mortgage, practically every homeowner is sure to receive one. The loan may be sold two, three or even four times to other lenders.In mortgage-industry parlance, it's called a "transfer of servicing." But although some borrowers may take the notice as a personal affront, it's really nothing to fret about."People shouldn't take it personally," said Alan Jones, senior vice president for servicing at Wells Fargo Home Mortgage in Des Moines. "It doesn't have anything to do with anything they have done. It's a standard business practice."Wells Fargo is one of the few lenders that rarely transfers the servicing rights to the loans it originates. Otherwise, the practice is very common. Full story!!
http://www.latimes.com/classified/realestate/news/la-fi-lew23-2009aug23,0,714106.story
Hey, it's not my bill to pay!
Hey, it's not my bill to pay!
By Steve Bucci • Bankrate.com
first bold text -->
Dear Debt Adviser,A debt collector called me last week about a debt from 2002! I know this is not my debt. It's for a phone bill from a different state! They had my Social Security number and everything. This is a debt that showed up on my credit report a few years back and I notified the credit bureau that it wasn't mine. They supposedly reviewed it and the matter was to have been resolved, but I never got any paperwork. Now this debt collector is calling and harassing my family and sending me notices. What do I do?
Do I have to pay for another credit report and file a complaint again? This is so upsetting and really causing a lot of stress for me. Can you steer me in the right direction? Thanks so much! -- Amy
Dear Amy,I know how upset you must feel. Having a collector harass you out of the blue is a lot like being the victim of an assault or a crime. Will anyone believe you? How do you prove your innocence? And it is so embarrassing for most of us.
Fortunately, the law is on your side. The Fair Debt Collection Practices Act, or FDCPA, says you have 30 days to respond to a collection attempt and you are well within your rights to dispute the alleged debt. The collector might have the wrong person, or you could be the victim of a scam to get money for a bogus bill. Either way, you have the right to have the collection agency prove that you owe the money.
All you need to do is ask that they provide proof of the debt. Write to them using certified mail, with a return receipt requested. Keep copies of everything and notes of any calls. Demand communication through the mail. Having information mailed opens any possible scammers to mail fraud charges and ups the ante for them. For more tips regarding the FDCPA, go to the Federal Trade Commission's Web site or search under FDCPA.
When you dispute the bill, the collector must stop all collection activity and send you proof before reinitiating contact. If they violate this provision, you can have them sued.
As for your credit report, you no longer have to pay for your credit reports from the three major credit bureaus. All you need to do is visit AnnualCreditReport.com and you can receive a copy of your credit report from Equifax, Experian and TransUnion absolutely free with no strings attached once every year. I typically recommend that requests for reports be spaced out throughout the year rather than getting all three at once, unless it is necessary to see everything that is being reported at one time. Getting all three right away would probably make the most sense for your current situation, but going forward you could space out your review of each bureau's report throughout the year.
I want you to take a look at your credit reports and see if the phone bill debt shows up as "in collection," or for that matter at all. Because this isn't your bill, you need to again dispute the debt with the bureau, or you can dispute it directly with the creditor that reported it. The dispute process will be spelled out in the materials you get from the bureaus. The Fair Credit Reporting Act requires that the credit bureau investigate the dispute and if there isn't sufficient proof that the debt is yours, it must be removed. I also suggest that you write to the creditor and tell that firm to stop reporting debt incorrectly.
Errors on credit reports are not unusual for the simple reason that billions of pieces of information are reported, mostly by computers, and mistakes are bound to happen. Still, that doesn't help your sinking stomach when the phone rings. Once you have disputed the bill and sent your letters, screen your calls with caller ID or an answering machine. If the harassment continues, see an attorney. They just love dealing with collectors who are bullies and mistaken. And that will be the end of that tune!
Good luck!
By Steve Bucci • Bankrate.com
first bold text -->
Dear Debt Adviser,A debt collector called me last week about a debt from 2002! I know this is not my debt. It's for a phone bill from a different state! They had my Social Security number and everything. This is a debt that showed up on my credit report a few years back and I notified the credit bureau that it wasn't mine. They supposedly reviewed it and the matter was to have been resolved, but I never got any paperwork. Now this debt collector is calling and harassing my family and sending me notices. What do I do?
Do I have to pay for another credit report and file a complaint again? This is so upsetting and really causing a lot of stress for me. Can you steer me in the right direction? Thanks so much! -- Amy
Dear Amy,I know how upset you must feel. Having a collector harass you out of the blue is a lot like being the victim of an assault or a crime. Will anyone believe you? How do you prove your innocence? And it is so embarrassing for most of us.
Fortunately, the law is on your side. The Fair Debt Collection Practices Act, or FDCPA, says you have 30 days to respond to a collection attempt and you are well within your rights to dispute the alleged debt. The collector might have the wrong person, or you could be the victim of a scam to get money for a bogus bill. Either way, you have the right to have the collection agency prove that you owe the money.
All you need to do is ask that they provide proof of the debt. Write to them using certified mail, with a return receipt requested. Keep copies of everything and notes of any calls. Demand communication through the mail. Having information mailed opens any possible scammers to mail fraud charges and ups the ante for them. For more tips regarding the FDCPA, go to the Federal Trade Commission's Web site or search under FDCPA.
When you dispute the bill, the collector must stop all collection activity and send you proof before reinitiating contact. If they violate this provision, you can have them sued.
As for your credit report, you no longer have to pay for your credit reports from the three major credit bureaus. All you need to do is visit AnnualCreditReport.com and you can receive a copy of your credit report from Equifax, Experian and TransUnion absolutely free with no strings attached once every year. I typically recommend that requests for reports be spaced out throughout the year rather than getting all three at once, unless it is necessary to see everything that is being reported at one time. Getting all three right away would probably make the most sense for your current situation, but going forward you could space out your review of each bureau's report throughout the year.
I want you to take a look at your credit reports and see if the phone bill debt shows up as "in collection," or for that matter at all. Because this isn't your bill, you need to again dispute the debt with the bureau, or you can dispute it directly with the creditor that reported it. The dispute process will be spelled out in the materials you get from the bureaus. The Fair Credit Reporting Act requires that the credit bureau investigate the dispute and if there isn't sufficient proof that the debt is yours, it must be removed. I also suggest that you write to the creditor and tell that firm to stop reporting debt incorrectly.
Errors on credit reports are not unusual for the simple reason that billions of pieces of information are reported, mostly by computers, and mistakes are bound to happen. Still, that doesn't help your sinking stomach when the phone rings. Once you have disputed the bill and sent your letters, screen your calls with caller ID or an answering machine. If the harassment continues, see an attorney. They just love dealing with collectors who are bullies and mistaken. And that will be the end of that tune!
Good luck!
Tuesday, August 25, 2009
Money 101 Buying a Home!!!
Don't buy if you can't stay put.
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.
http://money.cnn.com/magazines/moneymag/money101/lesson8/
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.
http://money.cnn.com/magazines/moneymag/money101/lesson8/
Life after foreclosure!!!
City: Chicago
Price paid: $245,000
Current value: 175,000
Lesson: "My only regret is that ... we signed a contract and then we couldn't fulfill that contract."
Stephanie Thomson's troubles began when her husband Rich, a highly regarded hair designer, became disabled with neuropathy and could no longer work.
The income loss made it impossible for the couple to sustain the payments on their home in a Chicago suburb.
When they bought the house, they took out a hybrid ARM mortgage. The original bill was $1,400 a month. But it went to $1,900 after three years and more than $2,000 after the second reset six months later.
"With my husband unable to work, we could have paid the mortgage without the ARM reset but nothing more," says Stephanie, who tried for months to get help from her lender.
"They told me they would pray for me. That's an exact quote," she says.
The Thomsons decided to stop paying their mortgage last July -- their first time missing a payment. They didn't pay for 10 months, during which time YouWalkAway.com helped guide them through the foreclosure process.
In April, having saved what they would have paid in mortgage, they relocated to Elyria, Ohio, where Stephanie has relatives. Unfortunately, their credit scores had dropped so low that it was difficult to rent -- much less buy -- a new place. So Stephanie's mom bought a house and rents it to them.
"It's less expensive here; we were able to get a larger house in a wonderful neighborhood," she says. "My only regret is that I'm a proud person. We signed a contract and then we couldn't fulfill that contract because of my husband's illness. It was very difficult."
Price paid: $245,000
Current value: 175,000
Lesson: "My only regret is that ... we signed a contract and then we couldn't fulfill that contract."
Stephanie Thomson's troubles began when her husband Rich, a highly regarded hair designer, became disabled with neuropathy and could no longer work.
The income loss made it impossible for the couple to sustain the payments on their home in a Chicago suburb.
When they bought the house, they took out a hybrid ARM mortgage. The original bill was $1,400 a month. But it went to $1,900 after three years and more than $2,000 after the second reset six months later.
"With my husband unable to work, we could have paid the mortgage without the ARM reset but nothing more," says Stephanie, who tried for months to get help from her lender.
"They told me they would pray for me. That's an exact quote," she says.
The Thomsons decided to stop paying their mortgage last July -- their first time missing a payment. They didn't pay for 10 months, during which time YouWalkAway.com helped guide them through the foreclosure process.
In April, having saved what they would have paid in mortgage, they relocated to Elyria, Ohio, where Stephanie has relatives. Unfortunately, their credit scores had dropped so low that it was difficult to rent -- much less buy -- a new place. So Stephanie's mom bought a house and rents it to them.
"It's less expensive here; we were able to get a larger house in a wonderful neighborhood," she says. "My only regret is that I'm a proud person. We signed a contract and then we couldn't fulfill that contract because of my husband's illness. It was very difficult."
Rent-to-own your home: Pro and con!!!
It's tough for buyers to find financing and hard for sellers to find buyers. A solution that can work well for both is renting with an option to buy.
NEW YORK (CNNMoney.com) -- With buyers scarce and financing tight, some home sellers are offering rent-to-buy options to potential buyers. In fact, there's been enough of a spike in interest that ForSaleByOwner.com added it as a search option on the site, says spokesman Eric Mangan.
These deals, also called rent-to-own and lease-option, usually require buyers to pay extra rents each month plus up-front fees of about 5% of the purchase price. The regular rent then goes in owner's pocket (presumably to pay the mortgage), but the additional payments are used to buy down the price of the home.
"Lease option agreements, if properly drafted, by and large are an effective way of enabling people to buy who are having trouble arranging financing or coming up with down payments," said Lawrence Jacobson, a real estate attorney in Los Angeles.
The Advantages
Because the contract is typically written to close in 12 to 36 months, it gives buyers the chance to experience homes and neighborhoods without having to make major commitments.
But the biggest reasons buyers opt for rent-to-buy deals are to build up down payments and to improve their credit profiles so obtaining a mortgage is easier.
For example, if they buy a $200,000 home, paying $5,000 up-front and a rent premium of $400 a month on top of their $1,000 market rent, they'll have $9,800 saved after one year and $19,400 after three.
In New York City, condo conversions are increasingly offering the option after having units sit empty. For example, the developers of a former commercial building on Wall Street are offering to apply 100% of "buyers" rents toward the purchase prices. And there are no up-front fees.
It's a luxury building with prices starting at $630,000 for a studio to $8.4 million for a four-bed penthouse. Sales were slow because buyers were having difficulties arranging financing, according to sales director Larry Kruysman.
"What we were finding from customers was that banks were making it more difficult to purchase," he said. The lenders were asking borrowers to put up 30% of the purchase price to obtain a mortgage rather than the traditional 20%.
But most rent-to-buy offers are from individual sellers, often people who have purchased new homes, can't sell their old ones and need to offset some of their mortgage costs.
Renee Haworth, a Louisiana homemaker, tried to sell a house in Mandeville, La., for many months without success.
"We had two or three buyers ask us if we would do a lease option," she said. "We hadn't thought about it before that."
She consulted an attorney and made a deal this past March. It calls for a sale price of $217,000 for the four-bedroom two-and-a-half bath house. The buyer put $3,000 down and pays $1,400 a month, $400 of which accumulates toward the sale price.
The renters agreed to exercise their option after 12 months. Under terms on their contract, if they decide to walk away, they lose both the $3,000 deposit and the $400 per month they pay over normal market rents. The Drawbacks But there are drawbacks to these deals. You need a good contract and a healthy sense of "buyer besmeared."
Losing your investment: For one, there's little protection for buyers who fall behind in payments. If you fall behind and are evicted, you lose any up-front fees and rent premiums you paid. Can't get a loan: If you still can't arrange financing at the end of the rental period, you may have to forfeit all the extra cash you've invested. The terms for that scenario would need to be spelled out in the contract. In buyers' markets, you may have the leverage to get a contingency clause specifying any up-front fees and extra rent be returned if you don't qualify for a loan.
Falling home prices: Buyers may be hesitant to lock into a set price a year in advance considering how much home values are plunging. If the comparables are significantly more attractive when it's time for your deal to close, you can sometimes renegotiate, but that's at the seller's discretion. If renegotiating is impossible, then you have to decide whether it's cheaper to walk away or go through with the deal.
Foreclosure scams: Some renters have been burned by doing lease-option deals with owners who are going through foreclosures. After months of taking the inflated rent payments even though they are in foreclosure, the owners finally have the home repossessed by the bank and the renters are served with eviction notices and are out their investments.
There have also been instances of foreclosure-prevention scams in which fraudsters take title to homes and do lease-option deals with unsuspecting renters. Instead of applying the initial deposit and the extra rent money to the down payments, the scam artists simply pocket everything and disappear. Because the renters don't get a title to the property until they close the bank loan, they are again out their investments.
Walk aways: Pitfalls exist for sellers as well. Renters may decide to not exercise their options if prices fall. That can leave sellers with large paper losses by the end of the lease compared with if they had sold the home when they originally planned. They are also stuck carrying the costs of the home until they find other buyers or tenants. Affordability
Most importantly, however, buyers must be cautious about entering into a deal that's unaffordable. The payment can seem manageable when you're just looking at the monthly "rent" payment. But there are more expenses than that.
First, the mortgage payment on a $200,000 home after paying $20,000 down, comes to more than $1,000 a month at the current very low interest rates, which are only available to borrowers with the best credit.
Over the past few weeks, rates have been creeping up again, so there's no guarantee they will be as low when the purchase is completed. Plus, credit-damaged buyers can expect to pay one or two percentage points higher at a minimum. That could add another $250 or more to the monthly bill.
Then add in private mortgage insurance, property taxes, all the utility and routine maintenance costs, and it could push the monthly payment past $2,000 - and affordability.
NEW YORK (CNNMoney.com) -- With buyers scarce and financing tight, some home sellers are offering rent-to-buy options to potential buyers. In fact, there's been enough of a spike in interest that ForSaleByOwner.com added it as a search option on the site, says spokesman Eric Mangan.
These deals, also called rent-to-own and lease-option, usually require buyers to pay extra rents each month plus up-front fees of about 5% of the purchase price. The regular rent then goes in owner's pocket (presumably to pay the mortgage), but the additional payments are used to buy down the price of the home.
"Lease option agreements, if properly drafted, by and large are an effective way of enabling people to buy who are having trouble arranging financing or coming up with down payments," said Lawrence Jacobson, a real estate attorney in Los Angeles.
The Advantages
Because the contract is typically written to close in 12 to 36 months, it gives buyers the chance to experience homes and neighborhoods without having to make major commitments.
But the biggest reasons buyers opt for rent-to-buy deals are to build up down payments and to improve their credit profiles so obtaining a mortgage is easier.
For example, if they buy a $200,000 home, paying $5,000 up-front and a rent premium of $400 a month on top of their $1,000 market rent, they'll have $9,800 saved after one year and $19,400 after three.
In New York City, condo conversions are increasingly offering the option after having units sit empty. For example, the developers of a former commercial building on Wall Street are offering to apply 100% of "buyers" rents toward the purchase prices. And there are no up-front fees.
It's a luxury building with prices starting at $630,000 for a studio to $8.4 million for a four-bed penthouse. Sales were slow because buyers were having difficulties arranging financing, according to sales director Larry Kruysman.
"What we were finding from customers was that banks were making it more difficult to purchase," he said. The lenders were asking borrowers to put up 30% of the purchase price to obtain a mortgage rather than the traditional 20%.
But most rent-to-buy offers are from individual sellers, often people who have purchased new homes, can't sell their old ones and need to offset some of their mortgage costs.
Renee Haworth, a Louisiana homemaker, tried to sell a house in Mandeville, La., for many months without success.
"We had two or three buyers ask us if we would do a lease option," she said. "We hadn't thought about it before that."
She consulted an attorney and made a deal this past March. It calls for a sale price of $217,000 for the four-bedroom two-and-a-half bath house. The buyer put $3,000 down and pays $1,400 a month, $400 of which accumulates toward the sale price.
The renters agreed to exercise their option after 12 months. Under terms on their contract, if they decide to walk away, they lose both the $3,000 deposit and the $400 per month they pay over normal market rents. The Drawbacks But there are drawbacks to these deals. You need a good contract and a healthy sense of "buyer besmeared."
Losing your investment: For one, there's little protection for buyers who fall behind in payments. If you fall behind and are evicted, you lose any up-front fees and rent premiums you paid. Can't get a loan: If you still can't arrange financing at the end of the rental period, you may have to forfeit all the extra cash you've invested. The terms for that scenario would need to be spelled out in the contract. In buyers' markets, you may have the leverage to get a contingency clause specifying any up-front fees and extra rent be returned if you don't qualify for a loan.
Falling home prices: Buyers may be hesitant to lock into a set price a year in advance considering how much home values are plunging. If the comparables are significantly more attractive when it's time for your deal to close, you can sometimes renegotiate, but that's at the seller's discretion. If renegotiating is impossible, then you have to decide whether it's cheaper to walk away or go through with the deal.
Foreclosure scams: Some renters have been burned by doing lease-option deals with owners who are going through foreclosures. After months of taking the inflated rent payments even though they are in foreclosure, the owners finally have the home repossessed by the bank and the renters are served with eviction notices and are out their investments.
There have also been instances of foreclosure-prevention scams in which fraudsters take title to homes and do lease-option deals with unsuspecting renters. Instead of applying the initial deposit and the extra rent money to the down payments, the scam artists simply pocket everything and disappear. Because the renters don't get a title to the property until they close the bank loan, they are again out their investments.
Walk aways: Pitfalls exist for sellers as well. Renters may decide to not exercise their options if prices fall. That can leave sellers with large paper losses by the end of the lease compared with if they had sold the home when they originally planned. They are also stuck carrying the costs of the home until they find other buyers or tenants. Affordability
Most importantly, however, buyers must be cautious about entering into a deal that's unaffordable. The payment can seem manageable when you're just looking at the monthly "rent" payment. But there are more expenses than that.
First, the mortgage payment on a $200,000 home after paying $20,000 down, comes to more than $1,000 a month at the current very low interest rates, which are only available to borrowers with the best credit.
Over the past few weeks, rates have been creeping up again, so there's no guarantee they will be as low when the purchase is completed. Plus, credit-damaged buyers can expect to pay one or two percentage points higher at a minimum. That could add another $250 or more to the monthly bill.
Then add in private mortgage insurance, property taxes, all the utility and routine maintenance costs, and it could push the monthly payment past $2,000 - and affordability.
Thursday, August 20, 2009
BofA's Countrywide loses court ruling on mortgages
NEW YORK (Reuters) – A federal judge has ruled that Bank of America Corp (BAC.N) cannot have a lawsuit by investors seeking to force it to buy back mortgages heard in federal court, saying he lacks jurisdiction to decide the case.
Tuesday's ruling by Judge Richard Holwell of the U.S. District Court in Manhattan means the case will move to state court. Holwell did not decide the merits of the case.
"Congress passed two statutes within a year of each other to address the mortgage crisis," the judge wrote. "In neither of these statutes did Congress federalize the case."
The ruling is a win for investors, to the extent that Holwell rejected a claim by the bank's Countrywide Financial Corp unit that new federal laws to encourage loan modifications to help struggling borrowers stay in their homes govern this case.
Countrywide had argued that the laws negated obligations it might have had to buy back modified loans. In 2008, Countrywide agreed with some 11 state attorneys general to modify $8.4 billion of loans made to roughly 400,000 borrowers.
Investors who own mortgage securities typically receive interest and principal payments. If servicers modified the underlying loans to reduce borrower obligations, investors would be harmed because they would receive lower payments.
Holwell did rule that investors bear the burden of showing that pooling and servicing agreements for their loans, taken "as a whole," require Countrywide to buy back the loans.
Bank of America could not immediately be reached for comment. A published report said a spokeswoman agreed that the court did not rule on the merits of the plaintiffs' claims.
The current case was brought by two investment funds holding Countrywide mortgages, Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC.
These investors complained they would be harmed if Countrywide shifted the burdens of loan modifications to 374 trusts into which loans had been repackaged and securitized.
These investors would rather Countrywide repurchase modified loans for the full unpaid amounts.
Countrywide had been the largest U.S. mortgage lender before Bank of America acquired it last July for $2.5 billion.
The case is Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC v. Countrywide Financial Corp, U.S. District Court, Southern District of New York (Manhattan), No. 08-11343.
(Reporting by Jonathan Stempel, with additional reporting by John Tilak in Bangalore
Tuesday's ruling by Judge Richard Holwell of the U.S. District Court in Manhattan means the case will move to state court. Holwell did not decide the merits of the case.
"Congress passed two statutes within a year of each other to address the mortgage crisis," the judge wrote. "In neither of these statutes did Congress federalize the case."
The ruling is a win for investors, to the extent that Holwell rejected a claim by the bank's Countrywide Financial Corp unit that new federal laws to encourage loan modifications to help struggling borrowers stay in their homes govern this case.
Countrywide had argued that the laws negated obligations it might have had to buy back modified loans. In 2008, Countrywide agreed with some 11 state attorneys general to modify $8.4 billion of loans made to roughly 400,000 borrowers.
Investors who own mortgage securities typically receive interest and principal payments. If servicers modified the underlying loans to reduce borrower obligations, investors would be harmed because they would receive lower payments.
Holwell did rule that investors bear the burden of showing that pooling and servicing agreements for their loans, taken "as a whole," require Countrywide to buy back the loans.
Bank of America could not immediately be reached for comment. A published report said a spokeswoman agreed that the court did not rule on the merits of the plaintiffs' claims.
The current case was brought by two investment funds holding Countrywide mortgages, Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC.
These investors complained they would be harmed if Countrywide shifted the burdens of loan modifications to 374 trusts into which loans had been repackaged and securitized.
These investors would rather Countrywide repurchase modified loans for the full unpaid amounts.
Countrywide had been the largest U.S. mortgage lender before Bank of America acquired it last July for $2.5 billion.
The case is Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC v. Countrywide Financial Corp, U.S. District Court, Southern District of New York (Manhattan), No. 08-11343.
(Reporting by Jonathan Stempel, with additional reporting by John Tilak in Bangalore
Home Buying FAQ's
The Home Buying Questions Master Category is one of four Master Categories (the others being home selling, mortgage and home ownership) dedicated to addressing Frequently Asked Questions. This Master Category focuses on the home buyer and questions related to the home buying selling process. Categories include:
http://www.realestatewiki.com/wiki_content/Buying_Disclosure_&_Inspection.htm
http://www.realestatewiki.com/wiki_content/Buying_Disclosure_&_Inspection.htm
Wednesday, August 19, 2009
Home sales up 3.8%
Home sales rose in most of the country in the second quarter compared with the first, a trend driven by falling prices, lower interest rates, and a tax credit for first-time home buyers.
http://www.usatoday.com/money/economy/housing/2009-08-12-higher-prices-homes_N.htm
http://www.usatoday.com/money/economy/housing/2009-08-12-higher-prices-homes_N.htm
Paying off mortgage not risk-free
There's a psychic satisfaction that comes from owning your home free and clear. Conservative investors look at the tumult in the stock market and use that as a justification for staying out of the financial markets and investing in things that have very little risk to principal. With low current returns on safe investments such as CDs and savings accounts, it's attractive to just empty those accounts to pay down or pay off the mortgage.
http://www.bankrate.com/finance/mortgages/paying-off-mortgage-not-risk-free.aspx
http://www.bankrate.com/finance/mortgages/paying-off-mortgage-not-risk-free.aspx
Friday, July 31, 2009
Home prices up for 1st time in 3 years
Index of 20 major cities rises on a monthly basis for the first time since July 2006, hinting that the worst of the declines may be over. http://money.cnn.com/2009/07/27/real_estate/May_Case_Shiller/index.htm?postversion=2009072814
Friday, July 24, 2009
Do I Have To Spend A Lot Of Money To Sell My House?
Although the seller should improve the home’s appearance and thus the appeal it holds for a prospective buyer as much as possible, there are inexpensive ways to achieve this.
Often exterior paint may be holding up well but needs to be pressure-washed. Trim may need to be repainted which can be done by the seller or the yard made more attractive by planting a few plants or strategically placing a few ready-made planters by the front entrance. The listing agent should be able to guide the seller in this effort.
In addition, the seller could visit new neighborhoods in the area and enter the model homes to identify latest trends in colors, landscaping, etc. Taking pictures will help refresh your memory and could assist with refreshing your home’s feel without spending a lot of money. In addition, you will be learning about your competition concerning look, feel and price. Since your home was built a few years earlier, you might be able to offer a similar value for a lower price, since construction costs typically increase with time. In addition, by talking to the agent on site, you might be able to learn what financial incentives the builder is offering the buyer.
Your agent should be able to put you in touch with a staging specialist or an interior decorator or designer to help you make color choices and rearranging the furniture to make the home look larger or cozier. There may be a consulting fee or perhaps no fee at all in order to win your business and future referrals.
Do I Have To Spend A Lot Of Money To Sell My House?
Although the seller should improve the home’s appearance and thus the appeal it holds for a prospective buyer as much as possible, there are inexpensive ways to achieve this.
Often exterior paint may be holding up well but needs to be pressure-washed. Trim may need to be repainted which can be done by the seller or the yard made more attractive by planting a few plants or strategically placing a few ready-made planters by the front entrance. The listing agent should be able to guide the seller in this effort.
In addition, the seller could visit new neighborhoods in the area and enter the model homes to identify latest trends in colors, landscaping, etc. Taking pictures will help refresh your memory and could assist with refreshing your home’s feel without spending a lot of money. In addition, you will be learning about your competition concerning look, feel and price. Since your home was built a few years earlier, you might be able to offer a similar value for a lower price, since construction costs typically increase with time. In addition, by talking to the agent on site, you might be able to learn what financial incentives the builder is offering the buyer.
Your agent should be able to put you in touch with a staging specialist or an interior decorator or designer to help you make color choices and rearranging the furniture to make the home look larger or cozier. There may be a consulting fee or perhaps no fee at all in order to win your business and future referrals.
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