Look For Improvements In The Real Estate Market In 2013

March 7, 2013 By Leave a Comment

Published March 7, 2013

Home Prices Improving March 2013

The previous couple years’ doom and gloom outlook is looking like it is turning more upbeat and robust for the rest of 2013.

Home Prices Climb Nearly 10% Over Past Year

In fact, a recently released report by CoreLogic stated that home prices were up 9.7 percent from one year previously.

That kind of increase is a very good sign that the momentum may be building for a strong real estate market this year.

Many other economic experts are predicting that things might be improving this year, including increases in both home prices and sales.

Here are some of the ways that these positive changes may impact home buyers and sellers this year.

For Buyers:

Attractive Financing Options

Interest rates could remain at the lowest levels they have been in years, which can make purchasing a home more affordable.

Stiffer Competition

More buyers will be competing for the homes that are available which could mean bidding wars on homes with more than one interested party.

Be sure to take this into consideration before making your offer, and have a licensed real estate professional representing you in your purchase negotiations.

Great Home Prices

Housing remains affordable in many areas of the country. Although home prices are rising, the cost of real estate is well below what it was ten years ago.

And For Sellers:

Marketing Is Vital

Working with a skilled property professional is imperative to ensure the best advertising and marketing for your listing.

Real estate agents have access to the Multiple Listing Service (MLS), which is where other agents and buyers look for properties that are listed and available for purchase.

Contract Negotiations Prevalent

Multiple offers will become more commonplace. Do your research on how to best handle contract negotiations.

Maximize Your Selling Price

Make sure you get the most for your home. Know what other properties are selling for in your neighborhood, and consider hiring a designer to stage your home for showing.

With the Greenville real estate market shifting, both buyers and sellers need to be aware of how the changes could affect them.

Whether you’re looking for your dream house or wanting to get the highest return on your home for sale, a great next step would be speaking with a qualified real estate professional.

 

Courtesy of your Arcadia Real Estate Agent

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Should You Pay Your Mortgage With Plastic?

February 12, 2013 By 2 Comments

Fixed-rate mortgage loans are low, but is no-interest credit card debt better?

Q. I realize mortgage interest rates are at historic lows, but I just got a come-on for a new credit card with 0% interest for more than a year on transferred balances. Should I transfer all or part of the balance of my mortgage ($22,500) to one of these cards? The one I just got in the mail offers cash-back rewards.

–Chicago

A. In prior years, some banks would encourage homeowners to pay off mortgages with credit cards they issued to get rebates or other rewards, but they haven’t done this since the housing bubble burst. The 0% interest rates offered now are really teasers to try to get consumers to transfer their balances from competitor’s high-rate credit cards. Letting borrowers replace low-interest fixed mortgages—or even variable-rate home equity lines of credit—with higher interest, compounding credit card debt is too risky in our still-shaky economy. A borrower without the resources to pay off the balance in full each month could quickly wind up with a ballooning debt and no means to repay it. Eventually, the lender would be stuck with another foreclosure to maintain and sell.

That said, if you have the excellent credit and paid-off credit card balance necessary to qualify for a 0% rate, it is possible to transfer money from your card into your checking account, and then pay the mortgage out of those funds. Or you could use a third-party company that charges your mortgage payment to your credit card each month (thus preserving any rebates or rewards that are only given to new purchases) in exchange for a fee.

But I wouldn’t recommend these strategies unless you are disciplined about paying your bill in full each month. You also should have the means to pay off or refinance the loan completely before the 0% rate expires, even if you lost your job, had a health-care crisis or experienced some other financial emergency.

There are two upsides to paying with plastic: First, if you borrow enough to pay off the balance of your mortgage, all of the money goes towards principal. And second, by borrowing the money from your credit-card company to pay off your mortgage, you free up your savings for other potentially lucrative investments.

But there are also some serious potential pitfalls. Putting a large amount of money on your credit card can hurt your credit. Many credit card companies only give cash back and other incentives for new purchases, not transferred balances. Plus, there are often hefty fees for transferring balances or taking cash advances that cancel out any benefit you get for the 0% interest rate. Worse, if you skip a payment, the card issuer may have the right to raise the interest rates from zero to the double-digits. So it’s important to read the card’s fine print before you make a commitment.

The bottom line: Don’t take this “free” money unless you don’t really need it. Otherwise the risk—potentially losing your home—is not worth a few rebates and rewards.

—Email fletcher.june@gmail.com

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Consumer watchdog tightens mortgage lending rules on banks

January 10, 2013 By Leave a Comment

In

Elise Amendola / AP

In this Thursday, Dec. 20, 2012, photo, a sign hangs in North Andover, Mass. The Consumer Financial Protection Bureau will force banks to verify a borrower’s ability to repay loans to ward off the kind of loose lending that helped push the U.S. economy into recession.

More than five years after the housing market collapsed, the U.S. government’s newly created consumer watchdog said Thursday it will force banks to verify a borrower’s ability to repay loans to ward off the kind of loose lending that helped push the U.S. economy into recession.

The Consumer Financial Protection Bureau said its new guidelines would also protect borrowers from irresponsible mortgage lending by providing some legal shields for lenders who issue safer, lower-priced loan products.

Lenders and consumer groups have anxiously awaited the new rules, which are among the most controversial the government watchdog is required to issue by the 2010 Dodd-Frank financial reform law.

“When consumers sit down at the closing table, they shouldn’t be set up to fail with mortgages they can’t afford,” Richard Cordray, the bureau’s director, said in a statement.

The new rules are intended to combat lending abuses that contributed to the U.S. housing bubble, when shoddy mortgage standards led American households to take on billions of dollars in debt they could not afford.

The U.S. economy is still feeling the after-effects of the bubble, which sparked a global credit crisis after it burst in 2006. As the housing market imploded, banks sharply tightened the screws on lending.

Regulators said the new rules would head off future crises by preventing irresponsible lending, without forcing banks to restrict credit further. Lenders will have to verify a potential borrower’s income, the amount of debt they have and their job status before issuing a mortgage.

And because lenders are likely to want the heightened legal protection that comes with offering certain “plain vanilla” loans, the rules could go a long way in determining who gets a loan and who can access low-cost borrowing rates.

Safe harbor for lenders
Dodd-Frank directed regulators to designate a category of “qualified mortgages” that would automatically be considered compliant with the ability-to-repay requirement. The rule was first set in motion by the Federal Reserve and then handed off to the consumer bureau in July 2011.

The consumer protection bureau said on Thursday that it would define “qualified mortgages” as those that have no risky loan features – such as interest-only payments or balloon payments – and with fees that add up to no more than 3 percent of the loan amount.

In addition, these loans must go to borrowers whose debt does not exceed 43 percent of their income.

These loans would carry extra legal protection for lenders under a two-tiered system that appears to create a compromise between the housing industry and consumer advocates.

Bank groups had lobbied the bureau to extend a full “safe harbor” to all qualified loans, preventing consumers from claiming in lawsuits that they did not have the ability to repay them. But consumer advocates wanted a lower form of protection that would allow borrowers greater latitude to sue.

Under the rules announced on Thursday, the highest level of protection would go to lower-priced qualified mortgages. Such prime loans generally will go to less-risky consumers with sound credit histories, the bureau said.

Higher priced loans would receive less protection. Lenders would be presumed to have verified the ability to repay the loan, but borrowers could sue if they could show that they did not have sufficient income to pay the mortgage and cover other living expenses.

Credit availability
Some lawmakers and mortgage lenders had warned against a draconian rule that could exacerbate the current credit crunch and set back a housing market that has become a bright spot in an otherwise tepid economic recovery.

Consumer bureau officials said they were sensitive to concerns about credit tightening, and they baked into the rules several provisions meant to keep credit flowing and to smooth the transition to the new regime.

The new rules establish an additional category of loans that would be temporarily treated as qualified. These mortgages could exceed the 43 percent debt-to-income ratio as long as they met the underwriting standards required by Fannie Mae, Freddie Mac or other U.S. government housing agencies.

The provision would phase out in seven years, or sooner if housing agencies issue their own qualified mortgage rules or if the government ends its support of Fannie Mae and Freddie Mac, the two housing finance giants it rescued in 2008.

Regulators also proposed creating a qualified mortgage category that would apply to community banks and credit unions.

Banks will have until January 2014 to comply with the new rules, the consumer bureau said.

 

Visit NBCNews.com for breaking news, world news, and news about the economy

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Fannie, Freddie short sales hit record high

January 8, 2013 By Leave a Comment

REO inventories down 36 percent from 2010 peak

BY INMAN NEWS, MONDAY, JANUARY 7, 2013.

Inman News®

<a href="http://www.shutterstock.com/pic.mhtml?id=50051371" target="_blank">Short sale sign</a> image via Shutterstock.
Short sale sign image via Shutterstock.

Loan servicers working on behalf of Fannie Mae and Freddie Mac signed off on a record number of short sales in the third quarter of 2012, according to a report from the mortgage giants’ regulator, the Federal Housing Finance Agency (FHFA).

Short sales and deeds-in-lieu of foreclosure totaled 37,966 for the three months ending Sept. 30, 2012, up 4 percent from the previous quarter and 23 percent from a year ago. Fannie and Freddie implemented accelerated timelines in June 2012 for reviewing and approving short-sale transactions.

Fannie and Freddie short sales and deeds-in-lieu


Right-click graph to enlarge. Source: Federal Housing Finance Agency.

The mortgage giants’ inventories of “real estate owned” (REO) homes also continued to decline, as Fannie and Freddie got rid of homes faster than they acquired them through foreclosures.

During the first nine months of the year, Fannie and Freddie acquired 197,507 homes through foreclosure, and sold 218,321 REOs and foreclosed homes.

Fannie and Freddie REO inventories (thousands of homes)


Right-click graph to enlarge. Source: Federal Housing Finance Agency.

All told, Fannie and Freddie had 158,138 homes in their REO inventories as of Sept. 30, 2012, down 13 percent from a year ago and a drop of nearly 36 percent from a Sept. 30, 2010, peak of 241,684.

Fannie and Freddie were placed under government control, or conservatorship, in September 2008. Since then, loan servicers working on their behalf have approved 2.1 million home retention actions, including 1.26 million permanent loan modifications.

During the same period, Fannie and Freddie acquired more than 1.1 million homes through foreclosure, and signed off on 413,436 short sales and deeds-in-lieu of foreclosure.

There have been about 4 million completed foreclosures nationwide since September 2008, according to data aggregator CoreLogic.

Of the 62,561 loan modifications completed in the third quarter, about 45 percent of borrowers saw their monthly payments decrease by more than 30 percent. More than a third of loan mods included principal forbearance. Less than 15 percent of loans modified in fourth-quarter 2011 had missed two or more payments as of Sept. 30, 2012, nine months after modification, the report said.

Since the beginning of the Obama administration’s Home Affordable Modification Program (HAMP) in April 2009, just over 1 million borrowers have been offered a trial loan modification, and more than half had been granted a permanent modification. Of those, 21.2 percent had defaulted as of the third quarter. The vast majority of the remainder, 428,946 borrowers, were in active permanent modifications as of the third quarter.

Since October 2009, Fannie and Freddie have offered 564,822 non-HAMP permanent loan modifications. Non-HAMP modifications made up two-thirds of all permanent loan mods in the third quarter, the report said.

The share of mortgage loans 30-59 days delinquent rose slightly to 2.08 percent of all loans serviced in the third quarter, but the share of seriously delinquent loans fell slightly to 3.39 percent. Seriously delinquent loans are those that are 90 days or more delinquent or in the process of foreclosure. More than half of seriously delinquent borrowers had missed more than a year of mortgage payments as of the end of the third quarter, the report said.

Nearly 3 in 10 of these deeply delinquent borrowers are located in Florida.

 

Courtesy of your Arcadia Real Estate Agent

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10 Banks Agree to Pay $8.5B for Foreclosure Abuse

January 7, 2013 By Leave a Comment

By Associated PressJan. 07, 2013
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(WASHINGTON) — Ten major banks and mortgage companies agreed Monday to pay $8.5 billion to settle federal complaints that they wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.

The banks, which include JPMorgan Chase, Bank of America and Wells Fargo, will pay billions to homeowners to end a review process of foreclosure files that was required under a 2011 enforcement action. The review was ordered because banks mishandled people’s paperwork and skipped required steps in the foreclosure process.

Under the new settlement, people who were wrongfully foreclosed on could receive from $1,000 up to $125,000. Failing to offer someone a loan modification would be considered a lighter offense; unfairly seizing and selling a person’s home would entitle that person to the biggest payment, according to guidelines released last summer by the Office of the Comptroller of the Currency. Monday’s settlement was announced jointly by the OCC and the Federal reserve.

The agreement covers up to 3.8 million people who were in foreclosure in 2009 and 2010. Of those, about 400,000 may be entitled to payments, advocates estimate.

About $3.3 billion would be direct payments to borrowers, regulators said. Another $5.2 billion would pay for other assistance including loan modifications.

The companies involved in the settlement also include: Citigroup, MetLife Bank, PNC Financial Services, Sovereign, SunTrust, U.S. Bank and Aurora. The 2011 action also included GMAC Mortgage, HSBC Finance Corp. and EMC Mortgage Corp.

The deal “represents a significant change in direction” from the original, 2011 agreements, Comptroller of the Currency Thomas Curry said in a statement.

Banks and consumer advocates had complained that the loan-by-loan reviews required under the 2011 order were time consuming and costly without reaching many homeowners. Banks were paying large sums to consultants who were reviewing the files. Some questioned the independence of those consultants, who often ruled against homeowners.

Curry said the new deal meets the original objectives “by ensuring that consumers are the ones who will benefit, and that they will benefit more quickly and in a more direct manner.”

“It has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers,” Curry said.

Some consumer advocates said that the agreement lets banks off the hook for payments that could have ended up being much higher.

“It’s another get out of jail free card for the banks,” said Diane Thompson, a lawyer with the National Consumer Law Center. “It caps their liability at a total number that’s less than they thought they were going to pay going in.”

Leaders of a House oversight panel asked regulators for a briefing on the proposed settlement on Friday. Regulators agreed to brief committee staff after the settlement was announced on Monday.

– By DANIEL WAGNER

 

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Housing recovery hinges on mortgage supply

December 11, 2012 By Leave a Comment

Commentary: Outstanding mortgages now below $10 trillion for first time since 2005

BY LOU BARNES, FRIDAY, DECEMBER 7, 2012.

Inman News®

<a href="http://www.shutterstock.com/pic.mhtml?id=97779053" target="_blank">Mortgaged home</a> image via Shutterstock.
Mortgaged home image via Shutterstock.

Markets are very quiet despite the usual first-week-of-month flood of new data. In the last week the 10-year T-note has not traded above 1.63 percent nor below 1.58 percent, and mortgages are holding just below 3.5 percent depending on borrower and property.

The November payroll survey estimate arrived with a 146,000-job gain. That’s better than forecast but garbled by Sandy, and we cannot know whether up or down. The unemployment rate fell to 7.7 percent, but may have been more distorted by Sandy than payrolls: The percent of unemployed fell because the surveyed workforce shrank.

“I’m calling from the Bureau of Labor Statistics. If you are not at work, do you still have a job but just can’t get to it? Have you quit looking for work because you’re demoralized, or because a tree fell on your car? Hello? Hello? You’re too cold to talk? You don’t seem to understand how important this call is to the nation. Hello? Is your phone out? Yes, I know that if it were we wouldn’t be talking. No need to be insulting.”

The Institute for Supply Management (“Purchasing Managers” in old days) takes two surveys at the end of each month. The manufacturing survey for November dumped two points from October to 49.5, the worst since 2009. The second one, for the service sector, rose to 54.7 from 52.3 in October. Tend to trust the manufacturing number: It has longer history, four decades versus one.

This morning the University of Michigan released its consumer confidence survey for December. It had been on a rising trend since late summer, up to 82.7 last month and was expected to stay there or higher, and instead tanked to 74.5. Economy rolling over? Republicans who just discovered who won in November? Nobody knows.


Without added mortgage supply, a genuine housing recovery lives only in the minds of the pollyannas.

Intermission for Fiscal Cliff. The election has brought order to Republicans, most of whom understand they could have had a better deal in 2011. House Speaker John Boehner fired two unruly Tea Pots from their committee posts, and South Carolina Republican Sen. Jim DeMint resigned altogether, headed for the Heritage Foundation, where he can screech in its phone booth undisturbed.

President Obama has less feel for his tax base and the economy than Mitt Romney for the people, but this time might not overreach his way out of a deal in plain sight. I think chances have reversed two bad weeks and improved now.

Back to reality. Each quarter the Fed releases Z-1, describing the movement and landing place of every buck in the financial system. Some new numbers are striking.

The net worth of U.S. households in the last 90 days rose by $1.7 trillion. Feel that?

Didn’t think so. A mere wobble in a base of $64 trillion. Which by the way is not a shabby net worth. Over the last year the wobbles have combined for genuine progress, a gain of $4.5 trillion.

The Fed estimates recovery of $1 trillion of the $7 trillion in home equity lost since 2006, a long way to go but moving. The other $3.5 trillion gained is in financial assets, most buried out of sight in pension funds, insurance company reserves, and retirement accounts, slow and quiet, but real.

Included in Z-1 are mortgage accounts. Yesterday’s release shows a pickup in post-Bubble plodding in some places, but a total stall in another. The overall figure contains both the good and the troublesome news: Aggregate U.S. residential mortgages have fallen by $88 billion in 90 days, $289 billion in the last year, and are now below $10 trillion for the first time since 2005 (from the $11.2 trillion peak in 2007).

Some of the overall decline is from overdue write-offs. Loans also disappear via sales and refis, but there is little of that in the worst stuff. The trash in private-label MBS is down to $936 billion from $2.2 trillion in 2007. Home equity loans (including seconds) from a same-year peak at $1.13 trillion have fallen to $790 billion.

The bad news: Without added mortgage supply, a genuine housing recovery lives only in the minds of the Pollyannas. The nation’s sole supply of new mortgages, Fannie-Freddie-FHA-VA, has been the same since 2009, about $5.8 trillion. All other sources, the “private” dreamland of government-haters, are just as inert as they have been since 2007.

When these mortgage aggregates begin to rise, then we’ll know that housing really is healing, and the economy with it.

Thanks to Bill McBride at www.calculatedriskblog.com, and his best-in-biz charts. He is more optimistic about today’s employment numbers, but I can’t see any of the “sustainable” progress here that the Fed is looking for, and expect them at their meeting next week to continue and even amplify QE3.


Graph via Calculated Risk Blog.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@pmglending.com.

 

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Housing gains boost Fed’s money easing as rally spurs growth

December 6, 2012 By Leave a Comment
In this Feb. 8 photo, two workers carry a window for a home under construction in a new subdivision by Toll Brothers in Yardley, Pa. A revival in the U.S. housing market is amplifying the impact of the Federal Reserve's efforts to spur the world's largest economy.

In this Feb. 8 photo, two workers carry a window for a home under construction in a new subdivision by Toll Brothers in Yardley, Pa. A revival in the U.S. housing market is amplifying the impact of the Federal Reserve’s efforts to spur the world’s largest economy. / ALEX BRANDON/AP
Written by
Jeff Kearns and Shobhana Chandra
Bloomberg News

A revival in the U.S. housing market is amplifying the impact of the Federal Reserve’s efforts to spur the world’s largest economy.

Home values boosted by record-low mortgage rates are helping improve the finances of both households and banks. That’s easing the flow of credit, providing a further boost to the housing market and the economy, say economists at Bank of America Corp. and Deutsche Bank AG.

“We’re in the very early stages of a reinforcing cycle,” said Michelle Meyer, a New York-based senior economist at Bank of America, the second-biggest U.S. lender by assets. “The Fed has been quite impactful.”

Meyer predicts monthly housing starts could exceed 1 million at an annual rate by the end of 2013, compared with 894,000 in October.Residential construction may add to economic growth this year for the first time since 2005, boosting gross domestic product by 0.3 percentage point, said Deutsche Bank’s Joseph LaVorgna. That contribution may double next year and reach 1 percentage point when related industries such as furnishings and remodeling are added, he said.

“The one thing missing from this economic recovery was a healthy contribution from housing, and we might finally be on the cusp of that,” said LaVorgna, chief U.S. economist for Deutsche Bank in New York, who predicts GDP may grow about 2.5 percent in 2013. “Housing is going to be integral to the economy. We’re assuming it continues to do some of the heavy lifting.”

The Fed in September announced it would buy $40 billion a month in mortgage-backed securities in its third round of so- called quantitative easing.

The central bank’s purchases of housing debt have helped drive borrowing costs to all-time lows. The average fixed rate on a 30-year mortgage was 3.32 percent last week, close to the prior’s week’s 3.31 percent that was the lowest on record, according to Freddie Mac.

U.S. home prices jumped 6.3 percent in October from a year earlier, the biggest increase since June 2006, data provider CoreLogic Inc. said today.

Combined sales of new and existing dwellings climbed to a 5.16 million annual pace in October, up 40 percent from July 2010, which was the lowest since comparable data began in 1999. The S&P/Case-Shiller index of home prices in 20 cities climbed 3 percent in September from a year earlier, the biggest gain since July 2010.

‘An Accelerator’

“Monetary policy is working,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas SA in New York. “What we’ve seen is a very robust housing recovery this year, particularly in prices. It’s kind of an accelerator for other sectors of the economy, consumption in particular.”

Stronger demand is boosting sales at builders such as Toll Brothers Inc., the largest U.S. luxury-home builder, which today said revenue jumped 48 percent to $632.8 million in the three months ended Oct. 31, while net contracts signed surged 75 percent.

The Standard & Poor’s Supercomposite Homebuilding Index, which includes Toll Brothers and PulteGroup Inc. among its 11 members, has climbed 77 percent this year, compared with a 12 percent increase for the broader S&P 500 Index. PulteGroup, up 171 percent this year, is the biggest gainer in the S&P 500.

The benchmark gauge of U.S. equities slumped 0.1 percent to 1,407.84 as of 3 p.m. in New York. The yield on the 10-year Treasury note retreated 0.01 percentage point to 1.61 percent

“If we can get ourselves into a positive, virtuous circle here with rising house prices, rising construction, improving employment, I think that part of that process will be easing of mortgage-lending conditions,” Fed Chairman Ben S. Bernanke said Nov. 20 in response to audience questions after a speech in New York.

The central bank’s efforts “are having the desired effects” by reducing mortgage rates, San Francisco Fed President John Williams said in a Nov. 14 speech, and the housing rebound “should be a key driver of economic growth.”

To be sure, housing is “far from being out of the woods,” in Bernanke’s words. Sales and prices are below pre-crisis levels, and about 20 percent of borrowers owe more than their homes are worth, Bernanke said in Nov. 15 speech in Atlanta. Residential investment now accounts for 2.5 percent of nominal GDP, down from a peak of 6.3 percent in 2005.

Hurdles Remain

Builders sold fewer new homes than forecast in October and purchases were revised down for the prior month, showing the industry still faces hurdles such as an unemployment rate that’s stuck around 8 percent three years into the economic recovery.

Williams last month said the central bank will probably start buying $45 billion a month of Treasuries next year in addition to the current $40 billion of debt purchases. The policy-setting Federal Open Market Committee meets Dec. 11-12.

“The unemployment rate remains unacceptably high,” New York Fed President William C. Dudley said in a speech yesterday.

Still, for those with jobs, low interest rates are a boon. Among them are Danny and Pat Yorkovich, who decided to buy a bigger house after 18 years in their current residence. They signed a contract on a new, three-bedroom ranch-style home in Charlotte, North Carolina, in November.

“The interest rates were good,” said Danny Yorkovich, 44, who works as an office manager. “We didn’t owe anything on the home we had, and had been saving up and waiting for the right time to purchase.”

New-home sales ripple through the economy as buyers spend an average of $8,000 on household items, including furniture, appliances and landscaping, according to David Crowe, chief economist for the Washington-based National Association of Home Builders.

That’s benefiting companies like Atlanta-based Home Depot Inc., the largest U.S. home-improvement retailer, and Lowe’s Cos., the second-biggest, which both reported higher third- quarter profit as sales rose. Shares of Home Depot have climbed 53 percent this year, while Mooresville, North Carolina-based Lowe’s is up 40 percent.

Even those who aren’t moving are spending more on furnishing and remodeling, according to Robert Niblock, chief executive officer of Lowe’s.

“The bottoming of home values gives that homeowner psychological permission to spend on their homes again,” Niblock said in a Nov. 19 telephone interview.

Cutting Debt

Household finances are improving, putting consumer demand on a stronger footing. Americans have cut debt by $1.37 trillion from the peak in 2008, according to Federal Reserve Bank of New York data. Household indebtedness shrank by $74 billion to $11.31 trillion during the third quarter.

Lending tied to real estate is reviving. After six years of declines, home equity lines of credit will rise 30 percent to $79.6 billion in 2012, the highest level since the start of the financial crisis in 2008, according to Moody’s Corp.

The Fed’s record easing policy is “a very big part” of why banks are becoming more inclined to make home loans, Bernanke said Nov. 20.

The benefits of lower borrowing costs and the housing industry’s improvement are starting to accrue for both the broader economy and the Fed’s monetary policy, according to Guy Berger, a Stamford, Connecticut-based U.S. economist at RBS Securities Inc., one of the 21 primary dealers authorized to trade directly with the Fed.

“Housing is gumming up the economy and financial markets less than it was,” Berger said. “The housing market’s improvement does give a little bit more bang to the buck.”

 

Courtesy of you Pasadena Real Estate Agent

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Debate leaves some taxing questions about housing unresolved

October 10, 2012 By Leave a Comment

Commentary: Obama and Romney need to provide more details on their positions

BY KEN HARNEY, WEDNESDAY, OCTOBER 10, 2012.

Inman News®

Mitt Romney and Barack Obama images via MittRomney.com and WhiteHouse.govMitt Romney and Barack Obama images via MittRomney.com and WhiteHouse.gov

Anybody who watched it knows that Mitt Romney scored a technical knockout of President Obama in last week’s debate. But are there some potential future costs and concerns for housing that have to be looked at in the wake of that victory?

On the one hand, Romney surprised Obama with sharp criticism over an issue that has plagued homebuyers and refinancers: the super-strict underwriting and documentation that banks are requiring for home loans, in part because they’re worried about forthcoming “qualified mortgage” federal rules under the Dodd-Frank financial reform legislation.

“It’s been two years,” Romney said to Obama at the Denver debate, “We (still) don’t know what a ‘qualified mortgage’ is. So banks are reluctant to make mortgages … It’s hurting the housing market.”

There’s no question that regulators have proceeded at a frustratingly glacial pace since the passage of Dodd-Frank in July of 2010, and we don’t know what the Consumer Financial Protection Bureau will come out with on this issue in early 2013.

COURTESY OF YOUR NUMBER ONE ARCADIA REAL ESTATE AGENT

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Can You Afford to Buy a Second Home?

September 19, 2012 By Leave a Comment

By Jeff Brown
With more and more signs that the housing market is inching off the bottom, homeowners with good credit and lots of resourcesare once again asking the question: Can I afford a second home?There’s something irresistible about the dream of a vacation place at the beach, lake or in the mountains. Summer vacations, the clan gathering for holidays, a place to pass down through the generations… It’s the American Dream, Act II.

The problem, of course, is coming up with the money. If you don’t have a trunk full of cash, the next easiest option is to borrow against your primary residence, thus avoiding the complex issues raised by a loan application specifically to buy a second home. But to borrow against your main home, it must be worth substantially more than you owe on a mortgage or home equity loan.

To take out a new loan to buy a second home you will have to convince the lender you are an especially good risk. That’s because lenders know that people are more likely to default on payments for a second home than a primary residence, or to skimp on maintenance or fall behind on property taxes or insurance.

So the first issue is your debt-to-income ratio, figured by dividing your total monthly debt payments for everything — existing mortgage, the new mortgage, car and credit card payments, and so on — by your gross monthly income. If the figure is less than 36 percent, you have a fair shot at a loan, if your payment history and credit rating are good. Some lenders will approve applicants with higher ratios; you’ll have to shop around.

Also expect lenders to demand a down payment of at least 20 percent, possibly twice that much, or even more. A large down payment reduces the loan-to-value ratio, figured by dividing the loan amount by the property’s current value, estimated by an appraiser approved by the lender. The smaller the loan relative to the value, the more likely the lender would recover what it is owed if you default and the lender must foreclose and sell the property.

You’re also likely to pay a higher interest rate on a mortgage for a second home — again, to offset the greater risk to the lender.

Discouraged yet? Don’t be. After all, even if lenders are more conservative these days, they make money only if they approve loans.

To make all this easier, try this calculator from The Mortgage Professor website. In the Occupancy Type window click Second Home. Note that in the Monthly Debt Payments window you should include your current mortgage payment if you will add a new mortgage for the second home.

Also play with this calculator from SmartMoney.

Before going too far down the road, check with some lenders for down payment requirementsand interest rates on second-home loans. Until then, experiment with down payments of 20 percent, 30 percent and 40 percent, and add 0.5 to 1 percentage points to the mortgage rates from the Bankingmyway.com survey.

For a sense of how lenders approach second-home applications, look at this site from Wells Fargo. It shows, for example, that it is difficult to get potential rental income included in the loan qualification calculation, a key consideration if you plan to rent out your second home part of the time.

Even if a lender will approve your loan, think about how comfortable you would be with this new financial obligation. You’ll need a healthy financial cushion for unexpected repairs and upkeep, a drop in your pay, a shortfall in rental income or a jump in taxes or insurance fees.

Finally, give your dream a reality check. Many people find, for example, that they lose interest in vacationing at the same place all the time. And a second home can someday become a bone of contention among the buyer’s children or grandchildren.

COURTESY OF YOUR NUMBER ONE ARCADIA REAL ESTATE AGENT

Filed Under: For Sale, Market, Mortgage Tagged With: , , , ,

6 ways to get a great mortgage deal

May 12, 2012 By Leave a Comment

By Ismat Sarah Mangla @Money April 30, 2012: 3:06 PM ET

Finding a great deal on an affordable house is no longer a problem but qualifying for a mortgage can be.
Finding a great deal on an affordable house is no longer a problem but qualifying for a mortgage can be.

(MONEY Magazine) — Finding an affordable house is no longer a problem but qualifying for a mortgage can be. Six tips to getting a mortgage and a good rate.

Put your credit on ice. The higher your credit score, the lower your rate: The best rates go to those with a 760 or more, says credit-score expert John Ulzheimer.

So keep that plastic in your wallet (and don’t apply for new cards or other loans) for at least three months before you go loan shopping. One large balance — even if it’s paid off at the end of the month — can ding your score by 20 points or more.

Ask for time. Most sales contracts give you only 10 days to nab a loan or the seller can move on. Negotiate for an additional five to 10 days to give you some room to shop around.

More: 8 ways to save on remodeling

Get at least six quotes. Rates on a 30-year fixed conforming loan can vary at least as much as a quarter of a percentage point. Get quotes from national lenders at mortgagemarvel.com and find out what your local credit union or regional bank is offering as well. Inquire about fees; while lenders aren’t required to give you a good-faith estimate of closing costs (which average 2% of the loan balance) until you actually apply, some will provide it if you ask.

Match the lock period to the loan. You now need 60 days or more to close a loan, says Wharton professor and mortgage expert Jack Guttentag of mtgprofessor.com, and getting an extension on a lock will cost at least a couple hundred dollars. Ask your lender how long it’s taking to close loans like yours — and don’t lock for less.

Money 101: Buying homeowner’s insurance

Opt for an ARM. If you know you’re not going to be in a house for more than seven years, adjustable-rate mortgages can mean big savings, says Guttentag. The monthly payment on a $300,000, seven-year ARM at the recent rate of 3.23% is $1,302, vs. $1,455 for a 30-year fixed at 4.13%.

Talk to a broker. Those who need a jumbo loan or have an unusual situation (say, you’re self-employed) will get the best deal from a mortgage broker who has access to and experience with a lot of lenders. Find a fee-only one at upfrontmortgagebrokers.org.

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Filed Under: Mortgage Tagged With: , ,