Posts
"Rates are low, but expect to pay more fees for a mortgage today.
New rules by Freddie Mac and Fannie Mae are upping the fees for borrowers with less than perfect credit, those in the mortgage industry say. Other increased costs reflect the uncertainty in the mortgage market, as lenders try to reduce their risk and anticipate rates.
According to Freddie Mac's weekly rate survey, the average rate on a 30-year fixed-rate conforming mortgage was 5.05% in January 2009, and a payment of an average 0.7 point was required to obtain the rate. A year ago, the average rate was 5.76%, but it took less to get that rate -- an average 0.4 point was required."
You can get a lower rate by paying points (pre-paid interest), but should do the math to determine if it's worth it. If you are planning to live in the home a long time it is a better decision to pay points up front and to have a lower interest rate in the long-run, but if you won't own the home for a long time, it may not make financial sense.
When comparing lenders make sure you ask about both the interest rate and the closing costs which include lender fees and points to make sure you are making the best decision.
http://finance.yahoo.com/loans/article/106630/Mortgage-Costs
Wednesday, February 25, 2009
Foreclosure Help
Another good question from MSNBC's answer desk:
If my home is already in the foreclosure process, can the homeowner bailout help? Or is it too late?
— Alicia O.
It’s not necessarily too late if you meet the criteria and your lender is willing to modify your loan. Many lenders have agreed to stop foreclosures already in progress until they have a chance to review them to see if the home can be saved with the help of the new plan.
Unfortunately, not everyone is going to be eligible for help. If you can’t show that you have enough income to cover even a modified loan, the plan can’t help.
The main provision of the plan is a series of financial incentives (payments) to lenders who agree to cut your monthly payment. The two most common ways to do this are to lower your interest rate to the current market rate or to stretch out your payments for 40 years. (You’ll still pay as much, you just get longer to do so.)
So if you live in the home backed by the mortgage you want to change, and if your current interest rate is much higher than the market rate (about 5.25 percent at this writing), you may be a good candidate for a new, more affordable loan. Even if you’re already in foreclosure.
The goal is to come up with a monthly payment that amounts to no more than 31 percent of your monthly income. If, after cutting your rate and stretching out your payments, you still don’t have enough income to meet that 31 percent threshold, the plan probably won’t work for you.
Aside from the burden of unaffordable monthly payments, many homeowners are carrying a mortgage that’s bigger than their home is worth. In some cases, lenders may be willing to reduce the principal down to the level of your home’s current value. After all, if they foreclose, they’re going to lose that money anyway.
But that’s up the lender or the company “servicing” your mortgage for the investors who own it. The program is entirely voluntary.
http://www.msnbc.msn.com/id/29306760/
If my home is already in the foreclosure process, can the homeowner bailout help? Or is it too late?
— Alicia O.
It’s not necessarily too late if you meet the criteria and your lender is willing to modify your loan. Many lenders have agreed to stop foreclosures already in progress until they have a chance to review them to see if the home can be saved with the help of the new plan.
Unfortunately, not everyone is going to be eligible for help. If you can’t show that you have enough income to cover even a modified loan, the plan can’t help.
The main provision of the plan is a series of financial incentives (payments) to lenders who agree to cut your monthly payment. The two most common ways to do this are to lower your interest rate to the current market rate or to stretch out your payments for 40 years. (You’ll still pay as much, you just get longer to do so.)
So if you live in the home backed by the mortgage you want to change, and if your current interest rate is much higher than the market rate (about 5.25 percent at this writing), you may be a good candidate for a new, more affordable loan. Even if you’re already in foreclosure.
The goal is to come up with a monthly payment that amounts to no more than 31 percent of your monthly income. If, after cutting your rate and stretching out your payments, you still don’t have enough income to meet that 31 percent threshold, the plan probably won’t work for you.
Aside from the burden of unaffordable monthly payments, many homeowners are carrying a mortgage that’s bigger than their home is worth. In some cases, lenders may be willing to reduce the principal down to the level of your home’s current value. After all, if they foreclose, they’re going to lose that money anyway.
But that’s up the lender or the company “servicing” your mortgage for the investors who own it. The program is entirely voluntary.
http://www.msnbc.msn.com/id/29306760/
Housing Relief Backlash
Here is a good question from MSNBC's answer desk:
How will the homeowner bailout affect responsible borrowers such as myself? I purchased my condo two years ago, borrowed what I knew I could afford considering my budget, and am not at risk of foreclosure. It seems unfortunate that we are bailing out those who did not borrow responsibly or did not truly understand their mortgages before signing them. So on top of me not seeing any advantage from the housing bailout, my taxes will most likely increase as well.
— Lars M., Evanston, Ill.
You’re not alone in wondering why your taxes should be used to help your neighbor make their mortgage payment.
The Obama administration’s plan to use $75 billion of tax dollars help some homeowners pay their mortgages touched off a huge backlash. Apart from a flood of mail to the Answer Desk inbox, the outrage was galvanized by CNBC's Rick Santelli, who covers the commodity markets in Chicago. On Thursday, Santelli gave voice to that outrage in an on-air rant that — among other things — called for a “tea party” this summer to protest the administration’s plan to “subsidize losers’ mortgages.”
It was apparently a rant heard ’round the world — or at least ’round YouTube. On Friday, White House press secretary Robert Gibbs felt the need to respond directly to Santelli’s attack on the Obama's foreclosure relief plan by noting that many homeowners facing foreclosure won’t be eligible for help, including investors and people who “long ago knew they were in a house they couldn’t afford. Instead, he said, the plan is targeted toward helping people “who aren’t yet in trouble keep from getting in trouble.”
Gibbs also pointed out that millions more Americans will benefit from the government’s comprehensive effort to drive down mortgages rates, allowing homeowners who aren’t in trouble refinance to a better rate and save money.
Preventing foreclosures also pays benefits to anyone who owns a home by slowing — and possibly stopping — the ongoing slide in home prices. Each new foreclosed property — sold at fire sale prices — drives down the value of every other home on the street.
“If you live in a home that’s near one that’s been foreclosed, your home value likely has dropped by about 9 percent, which for the average home is about $20,000,” Gibbs told reporters Friday.
According to the U.S. census, there were about 75 million owner-occupied homes at the end of 2008. By our math, that means that the $75 billion being spent to prevent foreclosures works out to about $1,000 per owner-occupied home. Which means you’re spending $1,000 in taxes to head of the loss of $20,000 on the value of your house. These days, that doesn’t seem like such a bad investment.
Gibbs invited Santelli to the White House to go over the plan and explain why it helps all homeowners.
“I’d be happy to buy him a cup of coffee,” said Gibbs. “Decaf.”
http://www.msnbc.msn.com/id/29306760/
How will the homeowner bailout affect responsible borrowers such as myself? I purchased my condo two years ago, borrowed what I knew I could afford considering my budget, and am not at risk of foreclosure. It seems unfortunate that we are bailing out those who did not borrow responsibly or did not truly understand their mortgages before signing them. So on top of me not seeing any advantage from the housing bailout, my taxes will most likely increase as well.
— Lars M., Evanston, Ill.
You’re not alone in wondering why your taxes should be used to help your neighbor make their mortgage payment.
The Obama administration’s plan to use $75 billion of tax dollars help some homeowners pay their mortgages touched off a huge backlash. Apart from a flood of mail to the Answer Desk inbox, the outrage was galvanized by CNBC's Rick Santelli, who covers the commodity markets in Chicago. On Thursday, Santelli gave voice to that outrage in an on-air rant that — among other things — called for a “tea party” this summer to protest the administration’s plan to “subsidize losers’ mortgages.”
It was apparently a rant heard ’round the world — or at least ’round YouTube. On Friday, White House press secretary Robert Gibbs felt the need to respond directly to Santelli’s attack on the Obama's foreclosure relief plan by noting that many homeowners facing foreclosure won’t be eligible for help, including investors and people who “long ago knew they were in a house they couldn’t afford. Instead, he said, the plan is targeted toward helping people “who aren’t yet in trouble keep from getting in trouble.”
Gibbs also pointed out that millions more Americans will benefit from the government’s comprehensive effort to drive down mortgages rates, allowing homeowners who aren’t in trouble refinance to a better rate and save money.
Preventing foreclosures also pays benefits to anyone who owns a home by slowing — and possibly stopping — the ongoing slide in home prices. Each new foreclosed property — sold at fire sale prices — drives down the value of every other home on the street.
“If you live in a home that’s near one that’s been foreclosed, your home value likely has dropped by about 9 percent, which for the average home is about $20,000,” Gibbs told reporters Friday.
According to the U.S. census, there were about 75 million owner-occupied homes at the end of 2008. By our math, that means that the $75 billion being spent to prevent foreclosures works out to about $1,000 per owner-occupied home. Which means you’re spending $1,000 in taxes to head of the loss of $20,000 on the value of your house. These days, that doesn’t seem like such a bad investment.
Gibbs invited Santelli to the White House to go over the plan and explain why it helps all homeowners.
“I’d be happy to buy him a cup of coffee,” said Gibbs. “Decaf.”
http://www.msnbc.msn.com/id/29306760/
Housing Stimulus Package details
I was on vacation last week, so I didn't get a chance to post the final details of the Housing Stimulus Package. Better late than never, right?
- Effective for purchases between January 1, 2009 and December 31, 2009.
- Tax credit for lesser of 10% of the cost of the home or $8,000.
- Eligible properties are single family houses, condos, and co-ops.
- Reduces or can eliminate tax liability for the year of purchase. Any unused amount of tax credit is refunded to the purchaser.
- Full amount of credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps.
- Purchasers and/or spouse may not have owned a principle residence in previous 3 years.
- Purchasers who utilize revenue bond financing can use credit.
- No repayment unless the home is sold within 3 years of purchase. The amount of credit is recaptured on sale.
more loans for investors
Here is some news for all of my readers who are investors:
Fannie Mae has agreed to begin purchasing and guaranteeing mortgages for investors who have loans on up to nine properties, starting in March. This is an increase from the current limit of three. With low interest rates and reasonable prices, it is a great time to invest.
Fannie Mae has agreed to begin purchasing and guaranteeing mortgages for investors who have loans on up to nine properties, starting in March. This is an increase from the current limit of three. With low interest rates and reasonable prices, it is a great time to invest.
Real Estate Outlook: Bottom in Sight?
This article by Kenneth R. Harney points out several sources of good news in the housing market. Two weeks ago, chief economist of Moody's Economy, Dr. Mark Zandi, surprised analysts by announcing that "the bottom of the housing downturn is in sight for the nation."
A few days later the Wall Street Journal published an article titled, "it's finally time to dive into the housing market." The article focused on purchasers in Phoenix, Seattle and Connecticut who recently found that lower prices and affordable mortgage rates made ownership possible for them. They got what appear to be great deals. The Journal quoted one Phoenix buyer who had just picked up a bargain-priced first home as saying, "six months ago, I didn't think I would ever own a home. Now I do. It's so perfect."
Just as housing's troubles preceded the rest of the economy on the way down, there are increasing indications that housing could be out ahead on the national economic recovery. Pent-up demand is strong, affordable financing is there for buyers with decent credit and a down payment, and improved federal tax credit incentives make the equation even better.
A few days later the Wall Street Journal published an article titled, "it's finally time to dive into the housing market." The article focused on purchasers in Phoenix, Seattle and Connecticut who recently found that lower prices and affordable mortgage rates made ownership possible for them. They got what appear to be great deals. The Journal quoted one Phoenix buyer who had just picked up a bargain-priced first home as saying, "six months ago, I didn't think I would ever own a home. Now I do. It's so perfect."
Just as housing's troubles preceded the rest of the economy on the way down, there are increasing indications that housing could be out ahead on the national economic recovery. Pent-up demand is strong, affordable financing is there for buyers with decent credit and a down payment, and improved federal tax credit incentives make the equation even better.
Saturday, February 14, 2009
latest on the housing stimulus
Please note that this has not officially passed yet, but I want to post the latest news for anyone who is in suspense like I am! The House and Senate agreed on terms of the housing stimulus package. They increased the tax credit to $8000 from $7500 and removed the repayment feature as long as the owner remains in the house for at least three years. This is for homes purchased between January 1 and December 1, 2009. It will still only apply to first-time home buyers. President Obama will still have to sign it before it goes into effect.
Tuesday, February 10, 2009
Historical Interest Rates
Many of us (myself included) tend to take these historically low interest rates for granted. Many don’t realize how good we have it when it comes to financing their home. To give some historical perspective, here’s a taste of where 30 year fixed mortgage rates have been over the years:
April 1950 4%
October 1966 6%
July 1974 9%
February 1980 12%
September 1981 17.5%
March 1985 13%
November 1988 10%
August 1992 7.5%
July 1996 8.25%
January 2001 7.03%
July 2004 6%
Today 5.25%
Source: Derek Harris from the Arlington Bank
April 1950 4%
October 1966 6%
July 1974 9%
February 1980 12%
September 1981 17.5%
March 1985 13%
November 1988 10%
August 1992 7.5%
July 1996 8.25%
January 2001 7.03%
July 2004 6%
Today 5.25%
Source: Derek Harris from the Arlington Bank
Wells Fargo Cancels Las Vegas Trip
Wells Fargo cancelled their traditional appreciation trip for over 1,000 of the top employees and guests to Las Vegas after receiving criticism for having this event despite receiving a bailout of $25 billion. At first they defended their trip as a tradition and part of their culture, but cancelled because of scorn from Capital Hill investors and lawmakers. These were lavish events where they would stay in top hotels, receive fantastic gifts and awards, viewed performances by Jimmy Buffett, Cher, or Jay Leno and/or participated in wine tastings, horseback rides, or helicopter rides. They said they had planned to scale down the trip this year before being forced to cancel it.
E-Pro
Hello Readers,
I am now officially an E-Pro! It is a designation from the National Association of Realtors that proves that I am savvy with e-mail, websites, Internet marketing, social networking, e-groups, blogging, smart phones, laptops, digital cameras, u-fax, etc. The Internet and e-marketing are the way of the future as more and more consumers look online for on-demand information rather than interruptions of irrelevant commercials during their favorite TV shows. Plus, consumers are turning toward their social networks for recommendations about products or services rather than blindly purchasing something off the shelf. That's why I present this blog to you so you can be educated consumers.
By the way, check out the links and mortgage calculator I added in the left column. I hope you find these helpful!
Your favorite E-Pro,
Karen
Friday, February 6, 2009
Columbus Blue Jackets Partnership
Coldwell Banker King Thompson is the official real estate company of the Columbus Blue Jackets. They offered us and our clients, family, and friends discount tickets between March 3rd and April 5th. Upper bowl tickets are $26 and the lower bowl is $60. Please contact me if you are interested and I will hook you up!
Tuesday, February 3, 2009
Home Fads that are Falling out of Style
An article from Realtor magazine explains features that are falling out of style in Las Vegas. Ohio styles follow Las Vegas, right? Here are six features decreasing in popularity:
- fireplaces: gas fireplaces can be expensive and wood-burning ones aren't very energy-efficient
- carpet: replaced by hardwood floors
- living room: this formal room hasn't been missed by buyers
- desks in the kitchen: tend to be too small and lead to clutter
- skylights: just disappearing
- upscale kitchens: granite is being replaced by affordable, low-maintenance laminate
Article by Melissa Dittmann Tracey
Multiple offers
Although it's not as common these days except on distressed properties, there is always the possibility of having multiple offers on a house that's for sale. The debate is, do you disclose the multiple offer situation to the involved buyers and their agents or not? On one hand, the buyers may present their highest and best offers or even out-bid each other in hopes of getting the property, but on the other both buyers could decide it's not worth it to inflate the price, back out of the deal, and move on to another house. In the first case the seller may get a higher price for the house, but in the second case the seller may not get a contract at all. Research from Realty Times suggests that overall it's better for the seller to disclose the multiple offer situation. If you are selling a house you should discuss with your Realtor what you would do in a multiple offer situation when you first sign with him/her, before the situation even comes up.
OHFA follow-up
As you saw in my post a few days ago the Ohio Housing Finance Agency (OHFA) brought back its down payment assistance grants. I just received the news about their interest rates. Currently, a 30 year fixed rate OHFA loan has an interest rate of 6.375% whereas an FHA loan is 5.5% and a conventional loan is 5.25%. The FHA loan requires a 3.5% down payment and a conventional loan needs a 5% down payment. So, if you have any money saved up, those may be better options for you.
Monday, February 2, 2009
Possible housing stimulus proposals
The economic stimulus package is being discussed in the Senate. Here are a few ideas that have been proposed:
- 4% interest rate: a 30 year fixed rate mortgage offered to qualified buyers and homeowners seeking to refinance. The goverment would pay for the difference between the market rate and 4%.
- tax credit: expand $7500 credit to all buyers (now just for buyers who haven't owned in the last 3 years) or increasing the tax credit to $15,000. Another idea is to remove the repayment feature of the tax credit.
- 90 day hold on foreclosures: gives homeowners some time to work out the situation with their lender
Let's hope that the Senators come up with a good plan to boost our housing economy!
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