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Americans Still Believe in Homeownership – Fannie Mae Survey

by bmadmin

 

Despite Americans’ pessimistic attitudes about the economy, 69 percent of the Americans surveyed in Fannie Mae’s Monthly National Housing Survey believed that it is still a good time to buy a home.

It was the fourth time in the last year that 69 percent or more of the respondents felt that way. However, that positive sentiment didn’t carry over when it came to whether or not they thought it was a good time to sell a home. Only nine percent of the Americans surveyed thought it was a good time to sell a home, down from 11 percent from the previous month.

And almost just as many Americans, 62 percent, said they would rather buy a home if they were going to move in the next year, while 34 percent said they would rent.

About half of the respondents, 49 percent, expected home prices to stay about the same over the coming year with 27 percent expecting home prices to decline and only 20 percent expecting home prices to increase. On average, respondents expected home prices to decline only 0.5 percent over the coming year, the third consecutive month in which a decline in home prices was expected.

When it came to attitudes about the economy and finances, Americans were significantly more pessimistic with 78 percent saying that the economy is on the wrong track and 16 percent believing the economy was on the right track.Most Americans must have thought that mortgage rates had hit bottom in August as only 11 percent thought that interest rates would be going lower over the next twelve months. Forty-five percent of the respondents felt that mortgage rates would be going up while 40 percent expected interest rates to stay about the same. Of course, this was before the Federal Reserve had announced it latest economic assistance plan.

The majority of Americans, 61 percent, reported that their household income was about the same as it was a year ago but that their household expenses were increasing. It was the third consecutive month that American’s reported that their expenses were increasing.

Forty-one percent said that their household expenses were significantly higher than a year ago, that’s up from 37 percent in June. Forty-seven percent reported their expenses were about the same, down from 53 percent in July, while 11 percent said their expenses were significantly lower.

Most Americans believe their financial situation will stay about the same or get better over the next year, but an increasing amount expect things will get worse.

Forty-one percent of the respondents expect their financial situation to be about the same in a year from now, that’s down from 44 percent in May, and 35 percent expect their financial situation to get better, which is down from 41 percent in May. Twenty-two percent of the respondents expect their financial situation to get worse, which is up from 16 percent in April.

See the full Fannie Mae Survey.

Good News for Military Vets

by bmadmin

Effective October 1, 2011, the costs associated with getting a VA mortgage are going DOWN!

An overview: VA mortgages are bundled, securitized and sold in the secondary market with the backing of the Federal Government. In order to insure these mortgages, the government charges a type of insurance premium, called a VA Funding Fee, which is typically added to the loan amount (thereby financed).

Remember, too, that the VA (subject to some restrictions) will insure loans up to 100% of the purchase price for the home.

What is happening next week? On loans that close effective October 1, that Funding Fee is being reduced. Because it is typical that the fee is financed into the loan, the VA is effectively lowering the monthly cost (because the loan amount is lower) AND the amount that will be paid back when the home is sold (again, because the loan amount is lower). It’s a win/win for the veteran.

If you have any questions about purchasing a home with a VA loan or if you already have one and are considering a refinance of it because of the low interest rates, reach out to us and let’s explore the possibilities. There has never been a better time!

Courtesy of KCMBlog.com

The Rental Economy is Booming for Real Estate Investors

by bmadmin

The rental market is booming for real estate investors right now even though homeownership is the most affordable its ever been.

If you look at the pro’s of purchasing a home right now, we see:

  • Low 30 year fixed rate loans
  • Home prices down 30-50% in some areas from the 2005-2006 peak
  • Lots of homes to choose from

These same reasons can be applied to owning rental property as well. Prices are cheap, loans are cheap, and the rental market is increasing. Those are all good reasons to buy an investment property. Its much simpler to purchase a rental property than you may think and we will guide you through the entire process.

Take a look at this video from CNBC and contact us today:

 

 

Low Interest Rates vs. Economy Jitters [VIDEO]

by bmadmin

Historically low interest rates combined with incredible deals on real estate have created the perfect time to buy a home.

“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.” -John Paulson

Check out this video from CNBC.com about the current real estate market and why renters should seriously consider homeownership.

What If You Could Buy Shoes…

by bmadmin

What if there was a shoe store that had:

  • An unparalleled selection of shoes of every size, color, and price range
  • The shoes were discounted 30% or more
  • You had a credit card that would finance the shoes for 30 years at 4.5%

How many shoes would you buy? My bet is there would be a line around the block. Well, today, real estate is like that shoe store (incredible selection, terrific bargains and excellent financing terms). But there’s more….

  • Shoes go in and out of style. Homeownership is still the American Dream.
  • Shoes are worth less once you wear them. Homes will appreciate in value over time.
  • Shoes get disposed of. Homes are lasting.

And while many can recount memories created in certain shoes, everyone can remember their first home, their first family gathering, the countless holidays shared. There is also the ability to decorate to your tastes, the stability (and lower crime rate) in homeownership neighborhoods and the higher level of education achieved by kids who grow up there.

If you’d stand in line to buy shoes, what’s stopping you from exploring a home? Despite some media perceptions, there is mortgage money available with reasonable down payment requirements at extremely low rates…talk to a loan officer. There are some great deals out there with short sales, foreclosures and regular transactions also!

Happy Shopping!

Assets and Your Mortgage Application

by bmadmin

When lenders evaluate mortgage borrowers, we look at four things: income (the ability to repay), credit (the willingness to repay), collateral (appraised value and property condition) and assets (cash in the deal and cash reserves after closing, mostly). Of the “four legs of the table”, assets are the least discussed, and yet may be the most important.

What do we mean when we talk about assets?

  • Monies needed for the down payment (the difference between the purchase price and the loan amount which may or may not be the same as the money deposit at contract signing)
  • Monies needed for closing costs (fees to the lender and third parties for things like appraisals, title insurance, settlement services, and so on)
  • Monies needed for Pre-Paids (homeowners insurance, flood insurance, real estate taxes, etc.) and establishing escrow accounts for future payments
  • Monies for Reserves– the money you still have left after closing. Monies that would be available, if a problem were to arise

Why do we care about assets?

  • Assets may be the truest reflection of a borrower’s fiscal strength. Their ability to save and properly budget could be a significant indicator to their future paying habits
  • The source of the assets is important. Savings? Gift or inheritance? Lottery victory? Insurance settlement? Sale of a baseball card collection? Each reflects differently on the borrower.
  • Many people don’t show all their income on their tax returns (it’s just a fact). Undocumented income can’t be used to qualify; however, often assets become a truer representation of a borrower ability to pay than their 1040s.
  • Reserves are an issue. A client with $50 in the bank after closing is riskier than one with $50,000. Also, clients who have money in the bank but have some sporadic lates on their credit are looked at differently than those who didn’t have the money to make the payments.

Common Asset Issues in Mortgage Packages:

  • Large deposits (defined as those which are excessive for the income level) raise an underwriter’s eyebrows. Where did the money come from? Maybe the borrower took a loan that doesn’t yet show up on their credit report.
  • Cash deposits are another red flag. In this day and age, people keep their money in the bank, not under their mattress. Where did the cash come from?
  • Gift monies and seller’s concessions, while considered as borrowers assets when doing calculations, will give an underwriter pause when assessing the borrower’s real ability to replay.

Guidelines have tightened. When borrowers are paying off credit cards to get their ratios in line, lenders are asking where that money came from now. That act has nothing to do with the home purchase, but may be a sign of something fragile in the borrower’s financial make up.

The best advice is to consult a loan professional to discuss the proper way to position your assets and the timing of it that will put you in the most favorable light.

 

3 Tips to Getting the Best Home Insurance

by bmadmin

If you’re a first-time homeowner, you might be a bit intimidated by the prospect of looking for the best home insurance coverage to protect your investment.

With all of the different insurance companies out there, it can be confusing to know which coverage options you need and how to get them at the lowest possible rate.

What follows are three tips that will help you compare home insurance so you find the policy that’s right for you.

  1. Find out what the policy covers and for how much you’ll be covered. For example, if you live in an area that’s at risk for tornadoes, you need to check to see how much coverage you have for wind damage.
  2. Review the policy carefully to see if you need additional insurance for floods or valuable possessions. Homeowners insurance doesn’t typically include flood insurance, so find out how to include that in your policy. In addition, if you have a lot of valuable possessions, such as a collection of antiques or art, find out if the policy offers enough coverage, or if you need additional insurance.
  3. Rates are always an important point when it comes to insurance. Check the annual and monthly premium amount to see if it’s viable for your situation. Also check the deductible amount to see how much that is. Remember, you always have to pay the deductible amount yourself, so you’ll have to have that money available in the event of a claim before your insurance coverage helps out.

 

5 Real Estate Headlines You’ll see in the Next Six Months

by bmadmin

This is great insight from our friends at KCMBlog.com:

 

Making predictions can be the ‘kiss-of-death’ for a blog. Even if we get four out of five correct (80%), there are those in the industry who will kill us on the one we got wrong. We believe strongly that when making a real estate decision for you and your family you must look forward and take into consideration how the housing market may change.

For this reason, we are willing to take on the possible wrath of our counterparts by sticking out our necks and predicting these will be the major real estate news stories from now until the end of the year.

Interest Rates Rise

Many, including us, have been surprised that rates have not risen already. However, the next several months are going to see three distinct changes that will propel rates upward.

  1. As the government starts to leave the mortgage market, private industry will step in. Private industry demands a higher rate of return on their investments. Mortgages will be no different. Studies have shown that 30 year mortgage rates could increase by 1 to 3% over the current rate.
  2. In many higher priced markets, rolling back Conforming Loan Limits means that rates for the mortgages on these properties will resort back to the rates on private jumbo loans. The FHFA informed us that last year, the difference between mortgage rates for jumbo loans and jumbo-conforming mortgages has varied between about ½ and ¾ of a percentage point.
  3. As the economy gets better (and we believe it will), the pressure to keep rates low to stimulate growth will abate.

Some Loan Requirements Tighten but More Can Now Get a Loan

Lending institutions have already started to introduce stricter mortgage guidelines. Whether the Quality Residential Mortgage (QRM) requirements are instituted as originally proposed or eased somewhat, there is no doubt that guidelines will continue to tighten as we work through the year. However, we believe the private sector will again start introducing alternative mortgage financing but at a greater expense to the consumer. You WILL be able to get a mortgage. It will just cost you more.

Housing Sales Increase

Contracted sales have shown consistent improvement over the last six months and we feel this will continue and actually begin gaining even greater momentum. We believe there is a ‘pent-up’ buying demand caused by the volatility of the market over the last several years. When interest rates start to move upward and alternative financing becomes more available, these buyers will start to jump off the fence. We believe there will be a major upswing in sales over the next six months.

Distressed Properties Increase Markedly

More people are paying their mortgage on time and that is great news for housing in the long term. However, the numbers of distressed properties currently in the foreclosure process is still very swollen. These properties will begin coming to the market in the second half of the year as short sales and foreclosures. The numbers will be staggering in some areas.

Prices Continue to Soften in Most Markets

The current housing inventory for sale and the distressed properties about to come on the market will vastly outnumber the increased supply of purchasers we will see over the next six months. There will be more houses for sale then there will be buyers purchasing them. That oversupply will continue to put downward pressure on prices through the rest of this year and into 2012.

You now know what we believe will take place in real estate between now and the end of the year.