by Dean Hartman on February 16, 2012
Before the end of the year, Congress and the President agreed to extend the payroll tax cut. In that bill, there were two items of interest for those involved in real estate.
1.) The hike in the Guarantee Fees charged by the GSEs Fannie Mae and Freddie Mac.
The 10 basis point increase in the fees has translated to a .375% to .5% increase in mortgage rates for conventional loans. Many customers who started their loans a couple of months ago are being “surprised” with higher than expected rates. Heck, everything you read in the papers says rates are at historic lows and will likely stay there through 2014. Many consumers feel as if their lender is being unscrupulous. However, your lender has fallen victim to the increase in Guarantee Fees and how the secondary market is passing on the cost. What looks like possible lender greed is just a passing on of the increased expense imposed by the government. Sadly, the increased revenue isn’t even being used to help aid an ailing Fannie Mae or Freddie Mac. It is being turned over to the US Treasury to cover the temporary extension of the payroll tax cut.
2.) Permission for HUD to increase the insurance premiums they charge on FHA loans.
If you remember, HUD charges two insurance premiums – a monthly one and an up-front one that is usually added into the loan. Most recently, they reduced the up-front mortgage insurance premium (UFMIP) and dramatically raised the monthly fee (MMIP). It is widely anticipated that, maybe as soon as April, we will see a hike in the UFMIP with no adjustment to the MMIP. While this will help shore up the reserves in the insurance fund, it will simultaneously make buying a home more expensive. No one knows the effective date or amount of the increase. Buyers should look to buy before the increase in fees.
We always hear how our government officials tuck away things in their bills. In this case, while the headlines during the holidays praised Washington for preserving the payroll tax cut, they may have hurt us more in the long run.
by The KCM Crew on January 3, 2012
Predicting trends during the most volatile housing market in American real estate history is no easy task. We strongly believe these are the five real estate items we should keep an eye on in 2012:
In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.
The ‘shadow inventory’ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.
As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:
An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.
As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.
Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.
Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets.
It seems that every time we talk about real estate today the conversation immediately goes to the financial aspects of buying a home. Where are prices headed? Where are interest rates headed? Should I wait to try and get a ‘better buy’? Should I wait until I can get a ‘steal’?
The odd thing about all these questions is that survey after survey keeps telling us that price is not the reason families actually buy a home. When money is considered at all, it is in light of not paying rent to a landlord. Let’s look at two recent surveys as examples:
The top five reasons given in the survey for buying a home, in order, are:
Price dominates conversation when we talk about buying a home. However, when it comes down to it, we actually buy for the same reasons our parents and grandparents did – we want a better lifestyle for ourselves and our families.
by The KCM Crew on July 5, 2011 · 5 comments
in For Buyers,For Seller
We have reached the midway point of the year. Today, we want to look back over the first six months and give you what we believe were the five items that have had the biggest impact on the real estate industry so far this year.
From the original outline of the Dodd-Frank regulations to the talk of closing Fannie Mae and Freddie Mac to the proposed Quality Residential Mortgage (QRM) guidelines, the government has made it very clear that they want to dramatically limit their involvement in the mortgage industry. What will come of this? Will private industry step up and fill the void created? What will be the increased cost to the consumer? Only time will tell.
Headlines earlier in the year announced the total collapse of the housing market. To those in the know, it was obvious that comparing sales numbers in the first four months of this year to the same period last year made absolutely no sense. The largest tax credit ever given to home buyers expired on April 30, 2010. Large numbers of transactions were dragged forward last year so buyers could take advantage of the credit. Pending home sales (transactions going into contract) on the other hand have done quite nicely and many institutions (ex. Fannie Mae, Freddie Mac, NAR and Moody’s Analytics) are projecting good sales numbers throughout the rest of the year.
Prices continued to retreat for the first few months of the year and brought the bears out. Some called for another major fall in prices (15-20%) and almost all recalculated their projections to show continued depreciation. Just as these new projections were made available, some pricing indices announced that values actually increased (though by a rather minimal percentage). Again, those with the best understanding of the market were quick to explain…
Distressed properties (foreclosures and short sales) have a major impact on the values of all properties in an area. Because of paperwork challenges, the flow of these properties to the market was virtually shut off. At the beginning of the year, most experts believed the banks would correct these challenges by the end of the first quarter. That didn’t happen and therefore many of these properties were delayed coming to the market. This is a major reason why prices seemed to recover: there were fewer discounted properties available for sale. Most now believe that the banks are within 60-90 days of releasing this inventory and that prices will again begin to soften.
With prices and interest rates at historic lows and the chance that mortgages will become more costly as the private sector steps in, many in the main stream media are announcing that buying a home now makes sense. In the last 45 days, the Wall Street Journal, Forbes Magazine, National Public Radio (NPR) and CBS Money Watch have all ran articles calling for the readership to consider buying now!
In a recent study, 19 percent of American consumers who reported finding an error in their credit reports opted not to dispute the error, even when they were offered $5 to file the dispute! Why not? Well, some said they thought the error was too minor to impact their score, while others said the dispute process seemed too difficult to tackle.
The fact is, when you’re trying to qualify for a home loan, some of the items on your credit report that can pose a threat to your home finance plans might surprise you. Here are 5 surprising credit report entries you absolutely must fix, especially when you are in the process of buying or refinancing a home.
1. Account balances you recently paid down or off. If you’ve just finished paying a bill down or off, you might not dispute the elevated balance that remains on your credit report because it’s not actually an error, per se. But the whole point of paying the balance down was to bring down your credit utilization ratio, which is a heavily weighted factor in your overall credit score.
Correcting the actual balances of your outstanding bills downward to account for your recent pay-down efforts poses such a large potential improvement impact for your credit score that it might even be worth paying your mortgage professional the $30 to $50 it will cost for them to initiate a Rapid Rescore, which can update your reports to reflect your slimmed-down balances in about 72 hours, compared with the 30 to 60 days you’d expect to wait to see results from a traditional dispute or update.
2. Incorrect former addresses. Of the 19 percent of consumers who spotted an error on their report in the study, nearly 40 percent of those errors were in what the credit bureaus call “header data," things like the consumer's previous street address. Many elected not to dispute these sorts of line items because the error doesn't seem like it would impact their credit score. While an inaccurate address might not have much to do with your score, it can still wave a red flag, signaling issues that can foul-up your mortgage application.
A misspelling in an otherwise correct street name should not cause you grave concern. But if the previous addresses listed are in the wrong city or state, or otherwise come out of nowhere, they might signal that someone has used your name and/or social security number to obtain credit at a different address. Credit card fraud and identity theft are difficult to unravel when you’re not seeking credit; they are much more complicated to resolve when the credit stakes are high and the underwriter as picky as they are in the course of applying for a mortgage.
Also, current and previous addresses that conflict with where you’ve told the lender you live(d) can raise suspicion that you might be buying a second or rental home, rather than the owner-occupied home you say you’re trying to buy; that can provoke a lender to demand that you ante up more down payment dough, make you jump through greater hoops to prove your true address or even stop you from qualifying for the loan altogether.
3. Bills that were never yours in the first place. As with completely bizarre former addresses, accounts listed on your credit report that you never opened in the first place can be a red flag that tips you to the fact that someone else might have stolen your identity and opened a credit card or account in your name. If you find one of these items on one credit bureau report, but it’s currently closed or has a zero balance, you might be tempted to let it slide, thinking it can’t move the needle on your credit score. In reality, though, if someone is using your identity to obtain credit and you fail to dispute that the bills belong to you, they might continue to use it, which can cause you real problems. Of course, if the bills weren’t paid on time or have been placed in collection, disputing the accounts’ presence on your credit report is a must.
If they were paid on time every time, though, the analysis might be different. Unfortunately, instituting a fraud-based credit freeze or fraud alert on your credit reports at the same time as you’re applying for a mortgage can complicate your own loan qualification process significantly. If you find yourself in this situation, carefully scrutinize the rest of your report and the credit reports you receive from the other bureaus to detect whether other fraudulent accounts exist, then consult with your mortgage professional on exactly when and how you should go about disputing the accounts which weren’t actually yours.
4. Limits listed as lower than they really are. As with closed accounts that were never yours in the first place, accounts that are listed on your credit report as having limits that are lower than they really are might seem like a battle not worth fighting. But the fact is that only two inputs go into the credit utilization ratio that comprises about 30 percent of your FICO score: how much credit you have available, and how much credit you have used. So, if you have account balances that show up on your credit reports as lower than they actually are (i.e., that you have less credit available to use), that inaccuracy can skew your credit score and screw up your mortgage qualifying efforts. Big time.
5. Derogatory items that should have aged off. Very few of us are perfect, and you might have worked hard to pay your bills on time in an effort to overcome a credit ding from back in the days. Although the impact a derogatory item has on your credit score wanes over time, it’s still your right (and your responsibility) to make sure negative items disappear from your credit report when they are supposed to – that’s 7 years for a late payment, 10 years for a bankruptcy. If you are still seeing credit dings on your report after more than the relevant time frame has elapsed, dispute them and claim the rehabbed credit (and score) you’ve since earned.
It’s not very common that credit report disputes cause dramatic changes in credit score, but again, many borrowers aren’t disputing these sorts of items they don’t realize could make a difference in their homebuying or refinancing prospect.
Beyond that, if you’re close to a credit tier cutoff, like 620-640 or 740-760, depending on your loan type, even a few points’ difference can be the difference in qualifying for a home or not, or paying a higher mortgage interest rate for the life of your loan. For these reasons, it behooves every potential borrower to be proactive in spotting and correcting these 5 must-dispute errors.
by The KCM Crew on June 7, 2011 · 0 comments
in For Buyers,Pricing
We received some tough news on housing last week. Prices are still softening. There was a lot of negativity surrounding these reports. The news caused more consumers to be concerned. However, the real question is what this means to you and your family. This could actually be great news if you are buying (either as a move-up buyer or a first-time buyer).
We don’t want you to take our word for this. Instead, here are excerpts from articles published last week by two of the country’s iconic financial publications: The Wall Street Journal and Forbes Magazine.
“Despite all the gloom, there are growing indications that it is a good time to buy… The long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.”
“If you’re planning to buy a house right now, the next few months may be the best time to buy… With a convergence of the factors (mentioned in the article) all of which are favorable to the prospective home buyer, there may not be a better time to buy than right now. It’s a buyer’s market, but like everything else in life, the bargain deals won’t last.”
When the Wall Street Journal and Forbes have articles saying now is the time to buy, maybe it’s time to buy
by The KCM Crew on June 1, 2011 · 2 comments
Families are trying to determine whether or not now is the time to buy a home. Some are advising these families to sit out the current real estate market and instead rent for the next year or two. We do not agree with this advice. Homeownership means a lot to a family. We also realize that the financial aspects of purchasing a home today can be a concern. The challenge is any advice given by someone in the real estate community is immediately dismissed as self-serving.
For this reason, we want to give you the advice of three entities not involved in real estate sales:
“When we examine the relationships between mortgage payments and income and mortgage payments and rent, we see that these relationships have also reverted back to or below equilibrium points. In some cases, particularly when mortgage payments are compared to the cost of renting, home prices actually appear cheap.”
“JPMorgan analysts said ‘the continuation of falling rental vacancies and rising rental demand will make home buying increasingly attractive’, especially as rental prices increase.”
“Fundamental drivers now appear to be in place that favor homeownership over renting in the near term future…
The second finding might seem unwise to many given the recent crash in the real estate markets around the country. However, rent-to-price ratios now seem to be in place along with other fundamental drivers that favor ownership over renting…
Conditions (historically low mortgage rates and relatively low rent-to-price ratios) now seem in place to favor future purchases.”
Is it better to rent or buy? According to those quoted above, it seems it may be becoming a no-brainer.
Print Article
RISMEDIA, April 20, 2011—The U.S. Department of Housing and Urban Development (HUD) is launching a new campaign in Miami, Chicago and Los Angeles called Know It. Avoid It. Report It. This campaign has two objectives. First, it aims to direct homeowners facing foreclosure to trusted resources and housing counselors. Second, and more importantly, the campaign wants to solicit the support of homeowners in shutting down scammers who regularly target the elderly, Hispanics and African Americans. Both objectives will be pursued through education and outreach, anti-scam reporting tools and close cooperation with federal, state, local and non-profit partners.
Newly deceptive scam artist tactics lure homeowners into misleading agreements. Their tactics include giving the false impression that they are affiliated with the government, charging illegal up-front fees and executing fraudulent lease-back, financing and repurchase schemes.
Highlights of the Know It. Avoid It. Report It. campaign include:
-Information on how to avoid becoming a victim
-Scam artist red flags and fraud warning signs
-Complaint form and hotline to report fraud or suspicious activity
-Resources for finding HUD-approved counselors and free housing workshops in every state
-Names of individuals and companies identified by law enforcement agencies who have allegedly committed loan modification fraud or foreclosure relief scams
Education, outreach and grassroots efforts in hardest hit communities include:
-Multilingual brochures, posters, flyers and other outreach materials
-Television, radio, print, mass transit and out-of-home advertising
-Social media activity
With millions of homeowners in foreclosure or at risk of losing their homes as they fall behind on mortgage payments, and eight million Americans expected to face foreclosure now through 2012, the timing of this campaign could not be more prudent.
HUD’s goal is to motivate homeowners to call 1-888-995-HOPE (4763) or visit www.hud.gov/preventloanscams to get the facts about fraud and to report suspected scammers.
For more information, visit www.hud.gov.
Despite a bruising, five-year drop in U.S. home prices, eight in ten Americans still believe that home ownership is the best long-term investment they can make, according to a new survey.
Apparently, hope springs eternal.
After a dramatic run-up in U.S. home prices the 1990s and early '00s — fueled by easy lending standards and the encouragement of Wall Street — the market began its sickening plunge in July 2006. The average metropolitan home has lost roughly a third of its value since then, according to the latest reading from the S&P/Case-Shiller Home Price Index.
The convertible was once one of the dominant automotive body styles, but in recent decades it has become little more than a minor niche. Still, some see a revival on the horizon.
Generous tax breaks for home buyers temporarily halted the slide last year. But with those incentives gone, home prices are headed lower again.
But the allure of the American Dream — and the fresh memories of those double-digit gains during a once-in-a-lifetime boom — are apparently offsetting the stinging losses brought by the bust, according to the survey by the Pew Research Center's Social and Demographic Trends project. The survey found that 81 percent of adults believe "buying a home is the best long-term investment a person can make."
The findings, released this week, are based on a telephone survey conducted among a nationally representative sample of 2,142 adults from March 15 to March 29.
The drop in home prices represents more than just a paper loss. Among homeowners who reported that their home is worth “a lot less” now than it was before the recession, roughly two-thirds said their finances are in worse shape than before the housing bubble burst.
Nearly half of all homeowners reported that their home is worth less now than before the recession began. Of those, the overwhelming majority say it will take at least three years for values to recoup their losses, while nearly half say it will take at least six years to recover.
Returns like that would give a gold bug second thoughts. But apparently few people have shaken the conventional wisdom, handed down for generations, that homeownership is a risk-free road to wealth. Some 37 percent of those surveyed "strongly" agreed that a home is the best long-term investment a person can make, while 44 percent "somewhat" agreed.
No word on how long they think it will take to again see multiple buyers showing up on the first day of a listing and waging cellphone bidding wars on the front lawn. Or condos flipped in six months for a 100 percent profit.
Some homeowners do have regrets about buying. Nearly a quarter said that if they had it to do all over again, they would not buy their current home. But most of those said they had buyer’s remorse because they don’t like the house itself or the location. Only a third said they regret buying their house because it was a bad investment.
On Tuesday, the CEO of one of the nation’s biggest mortgage lenders, Bank of America, sought to set homeowners straight on the wisdom of buying a house as an investment.
“It's sobering to think, but some people shouldn't be thinking of (their home) as an asset," Brian Moynihan told a gathering the National Association of Attorneys General, who are trying to work out a deal with bankers like Moynihan to help stem the tide of foreclosures. "They should be thinking of it as a great place to live."
Investment returns aside, pursuit of the American Dream — with homeownership as its core — still has a strong hold among 80 percent of Americans surveyed, along with “being able to live comfortably in retirement.” Some 73 percent include paying for their children’s college education on that list. And about half said the same about leaving an inheritance for their children.
© 2011 msnbc.com Reprints
Why Get An Inspection? | ResultsforYou | Why Choose Me | Contact Cheryl | Lead in the Home | Insurance Closing Costs | Getting the Highest Price | Free Home Valuation | Find A Home! | How Escrow Works | Hampton Roads Relocation Expert | Resume | Accomplishments/Accreditations | SEARCH MLS LISTINGS HOMES | MilitaryRelocationSpecialist | HAMPTON ROADS PERFORMS | Buy Homes Norfolk | Today's Buyer | Buy Homes Chesapeake | Your Local School Connection | Best Local Neighborhoods | First Time Home Buyer | Va. Beach Real Estate Homes | Closing Costs | First Time Buyers | Get Pre-qualified | Inspection Tips | Looking to Buy? | News | YourLocalRelocationSpecialist | Our Homes For Sale | Looking to Sell? | Home | Applying for a Loan | Your Buying Power | Writing the Offer | Locking in Rates | Staging Your Home | Staging Checklist | 9 Steps to Owning | Fixed Rate Mtg Calc | 15 vs 30 Year Mtg Calc | Rent vs Buy Calc | Mortgage Calculators | Your Dream Home | 9 Steps to Ownership | How to Sell Your Home | Staging Your Home | Be Accessible! | Buying Foreclosures/REO's | Contingencies in Contracts | The Back Yard | The Kitchen | Flowers Add Curb Appeal! | Fixer Uppers | My Blog
Copyright © 2012 Cheryl Talbot , ABR, GRI,e-PRO,SFRPortions Copyright © 2012 a la mode, inc.Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site MapAll rate, payment, and area information are estimates and approximations only.
