Builder Confidence Up, But Tax Fears Loom

September 18, 2009

NEW YORK — An index of home builders’ confidence rose in September for the third month in a row, but an industry group said Wednesday the fragile residential real estate market recovery could be cut short if a popular government tax credit isn’t extended.

The National Association of Home Builders said that its Housing Market Index, which it compiles for Wells Fargo, rose one point last month to 19 — the highest level since May 2008.

The index, which fell to an all-time low of 8 in January, has increased steadily in 2009 as the housing market picked up in many parts of the country.

According to NAHB, the rebound in builder confidence is largely due to a temporary tax credit that the government created last year for first-time home buyers. Low mortgage rates and rock-bottom home prices also helped boost confidence, the group says.

The credit, which can be as high as $8,000, was established as part of the government’s economic recovery act to help stimulate demand and revive the battered housing market.

As the market begins to show some sings of life, however, builders are becoming worried that the credit, which is set to expire Nov. 30, will not be renewed.

“The window is now basically closed for being able to start a new home that can be completed in time for buyers to take advantage of the tax credit,” said Joe Robson, NAHB’s chairman and a home builder from Tulsa, Okla, in a statement. “Builders are concerned about what will keep the market moving once the credit is gone.”

To that end, the index component that measures builders’ expectations for sales in the near future fell one point in September to 29, after rising for five months in a row.

More than 1.5 million taxpayers are expected to claim the credit, according to an NAHB spokeswoman.

Tax

Meanwhile, the National Association of Realtors said earlier this month that the credit has already brought 1.2 million new buyers into the market, including 350,000 buyers who would not have purchased a home without the credit.

White House press secretary Robert Gibbs said Wednesday that the Obama administration is evaluating how the tax credit has impacted home sales and could recommend that the President extend it.

While the tax credit has helped stabilize the housing market, falling home prices are the real reason why sales have begun to rebound, according to Mike Larson, real estate and interest rate analyst at Weiss Research.

“I believe the tax credit is the icing on the cake of this housing market recovery, not the cake itself,” Larson said in a research report.

Indeed, a government report released earlier this month showed that roughly 315,000 people have claimed the tax credit so far. However, industry analysts point out that those figures reflect a small portion of homebuyers who could ultimately claim it.

For buyers interested in taking advantage of the credit, time is of the essence.

Because it usually takes around 90 days to close on a house after a contract is signed, buyers have very little time left to act. As of Sept. 16, 78 days remain before the credit ends.

In addition to uncertainty about the tax credit, builders are also wary about a “critical lack of credit” for new home construction projects and ongoing problems related to appraisals that NAHB says are sinking one quarter of all new-home sales.

“These concerns need to be addressed if we are to embark on a sustained housing recovery that will help bolster economic growth,” said NAHB chief economist David Crowe, in a statement.

Source: CNNMoney.com

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Written by djumper · Filed Under Real Estate Blog 

Refinancing Your Mortgage – Is It The Right Choice For You?

September 17, 2009

Mortgage refinancing is an option for many homebuyers who are paying interest rates 2-3% or higher than what they can find today, or who need additional cash. Were you a first time homebuyer or you had poor credit the last time you obtained a loan? Now you are on your feet and make a salary that could help you receive the best interest rates. Possibly you are looking to refinance your mortgage so you can free some funds for a new car or for educational purposes. There are many options available when you refinance.

Before you decide if refinancing is right for you, look at your current financial situation. Do you have an adjustable rate loan or a fixed rate loan? How long do you plan to be in your home after you obtain your new mortgage? What is your ultimate goal? Most people want to refinance so they can access more money now. Refinancing is a great solution, but is a refinance of your loan the right solution for you?

The first step is making contact with you lender, and be aware how much your monthly payment is now. It is also helpful to find out how much you have paid of your mortgage towards principal. Since you will refinance the amount left on the mortgage principal, and not refinance the original mortgage amount, it is really important to know how much principal is left. If you plan to stay in your home for a length of time and still have a sizeable principal left on your loan, then a mortgage refinance may be a good option for you if interest rates are lower than when you obtained your last loan.

Just as with most conventional loans, refinancing offers similar options of adjustable and fixed rate mortgages and anywhere from 10-40 year loans. Be sure to review with your mortgage lender the reasons you are interested in refinancing; do you need to refinance to obtain cash for home improvements or for a new car purchase? These are important factors to make your lender aware of as you are deciding how to refinance your mortgage.

Mortgage

Another factor that determines whether borrowers refinance is interest rates. Current mortgage interest rates can rise and this often scares refinance borrowers who have ARMs because they are afraid the adjustable rates will rise after they refinance. It is difficult to assess what will happen to the adjustable refinance mortgage interest rates over the next few years. If you refinance into a fixed rate mortgage during a high interest rate period, then when interest rates go back down, you are stuck with a high fixed rate mortgage and another decision about whether or not to refinance again. Of course the only sure-fire way of knowing if you should apply for a refinancing is to assess your reasons for the refinance and how it will affect you in the future.

Source: Real Estate Global Network

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Written by djumper · Filed Under Real Estate Blog 

Time May Be Running Out to Get Home Buyer Credit

September 14, 2009

Barring a last-minute extension from Congress, first-time home buyers aiming to take advantage of an $8,000 federal tax credit are running out of time to get a deal in place.

With the time it takes to arrange financing, inspections and the other steps that go into closing a home purchase, home buyers should have a contract no later than the end of October, but preferably within the next few weeks, local real estate agents and lenders say.

The deal has to be completed no later than Nov. 30 to qualify for the credit.

Agents and bankers say they expect they’ll be able to handle the anticipated added workload without delays, but that buyers shouldn’t chance it. Most advise having a home under contract by Oct. 15.

“We are doing purchase loans in under 30 days right now,” said Sharon Decker, director of mortgage lending for Fifth Third Bank. “But if there is a big surge (in applications), all the lenders will be behind the 8-ball.”

The market for lower-priced homes in Louisville has already seen a surge and the final days of the housing credit could bring a wave of last-minute buyers making offers for starter homes, said Jan Scholtz, president of the Greater Louisville Association of Realtors.

After being outbid on two houses, Gina Scarpino, a 24-year-old hair stylist, recently found one in Schnitzelburg. With someone else making an offer the same day, she agreed to pay $124,000, less than $1,000 below the seller’s asking price.

“It was actually super-difficult because everyone was looking to buy a house with the tax credit,” she said. “They are being snapped up.”

But while the market for starter homes has improved because of the credit, it’s rarely come to bidding wars, said John Oldfather, Scarpino’s real estate agent. He noted there are still more than 3,800 listings for houses priced from $75,000 to $200,000 in Louisville, as of Monday. “And we don’t have that many buyers in the market,” he said.

The $8,000 credit is available typically to first-time home buyers, but can also be used by anyone who hasn’t owned a home for at least three years prior to the purchase. As a credit, the buyer’s tax bill is reduced by $8,000; buyers whose tax bill isn’t that big will collect the money in the form of a government refund.

Source: Courier Journal

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Written by djumper · Filed Under Real Estate Blog 

Two Major Lenders Step Up Mortgage Modifications

September 10, 2009

The sluggish $75-billion federal mortgage relief program got a boost from Wells Fargo & Co. and Bank of America Corp., both of which stepped up their efforts last month to modify home loans.

The two banks, which took a total of $70 billion in taxpayer bailout funds to shore up their finances, have been roundly criticized on Capitol Hill for not moving quickly to help distressed homeowners.

Last month, Bank of America more than doubled the number of home loan modifications it started, to 59,891, over its July numbers, while Wells Fargo increased its modifications 64% to 33,172. That helped pump up the industry’s response to the slow-starting federal program 53% to more than 360,000 modifications, according to figures released Wednesday by the banks and in the Treasury Department’s now monthly report.

Still, the Obama administration’s Making Home Affordable program isn’t getting to struggling homeowners quickly enough, some argue. The administration itself set a target of modifying 500,000 mortgages by Nov. 1.

“I am disappointed at the pace of this program,” said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.

Kevin Stein, associate director of the California Reinvestment Coalition, a homeowner advocacy group, said, “These numbers still aren’t where they should be.”

Even the Treasury Department acknowledged that the pace of modifications had to pick up.

“There are signs the plan is working,” Michael Barr, assistant Treasury secretary for financial institutions, told the House committee Wednesday. “But we can do better.”

The department’s monthly report, its second since the program was launched in March, should get some credit for giving the program a boost, Stein said.

“For the first time, last month we were able to see data on which companies were helping families avoid foreclosure and which companies were not,” he said. That exposure for July’s activity, he said, shamed especially Bank of America and Wells Fargo, which had turned in embarrassingly low numbers in July.

Also, although 85% of the mortgages nationwide are held by institutions voluntarily participating in the program, Stein suggested that banks and other lenders would be moving faster if participation were mandatory.

Up to 4 million homeowners have mortgages that qualify for adjustment under the administration’s program.

Bank of America, Wells Fargo and other loan servicers said slowdowns were caused by the need to increase staffing in loan-servicing departments and by government delays in distributing information about the program. Wells Fargo said it was well on its way to modifying more than its share of eligible loans.

Overall, about 1 in 5 eligible homeowners, or nearly 19%, have had their mortgages changed through the program, the report said. In July, that number was about 9%.

In some cases, loan servicers are using the plan’s rules to keep homeowners from taking part, which results in homes heading to foreclosure anyway, said Bruce Dorpalen, director of housing counseling for the Assn. of Community Organizations for Reform Now, or ACORN.

“We need stronger enforcement,” Dorpalen said. “We’re still finding foreclosure sales going through with no review to see if homeowners are eligible for loan modifications.”

ACORN is calling for the federal government to impose a one-year freeze on foreclosures to allow homeowners more time to figure out whether they are eligible for loan changes under the program.

Source: The L.A. Times

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Written by djumper · Filed Under Real Estate Blog 

Community Links

March 4, 2009

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Written by djumper · Filed Under Community Links