5 Questions to Consider Before Purchasing a Home
December 17, 2009
Interest rates on the benchmark 30-year, fixed-rate mortgage dipped to a 38-year low recently, giving consumers another reason to consider purchasing a home or refinancing their current one.
Freddie Mac recently stated the average rate on a 30-year loan was 4.71% with an average 0.7 point, the lowest rate since the agency began its weekly tracking of long-term interest rates in 1971. A point is equal to 1% of the loan amount, payable as a lump sum at closing. While the decline wasn’t overly dramatic, the dip is likely to get people wondering whether it’s time to sign on the dotted line.
The 5 following questions may help you decide if now is the time to go ahead and purchase a home or refinance your current home.
Q: Why are rates so low?
A: Since early January, the Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae in an effort to stabilize the housing market by making homes more affordable for consumers. The Federal Reserve Bank of New York, which is managing the program, plans on purchasing $1.25 trillion of securities.
Q: Are rates expected stay this low?
A: It’s hard to tell, but don’t count on it because the lending landscape is likely to change next year. In September 2009, the Fed said it would gradually wind down the purchase program, ending it by March 30, 2010. That has some in the mortgage lending industry worried.
In a recently published mortgage survey, more than 60% of Bankrate.com’s panel of experts predicted that rates will move higher over the next 30 to 45 days. How much higher is anyone’s guess. Last year at this time, the average 30-year, fixed-rate mortgage was 5.53%.
Q: Why do different mortgage surveys come up with different average interest rates?
A: It depends on which lenders are in their sample, when the survey was taken and whether the rates quoted are the posted rate, the application rate or the commitment rate. Also, some surveys take into account the points paid to secure the rate.
But regardless of the survey, the general consensus is that rates are ultra-low right now and may be the lowest the market will see.
Q: What else does a consumer need to know?
A: The lowest rates are offered to the most credit-worthy customers who can make sizable down payments. Shop not just for the interest rate and the points involved but also for the fees involved, which can vary widely from one lender to another.
If you’re refinancing, remember the bigger the loan, the greater the payoff for finding a lower interest rate. Savvy customers put in their paperwork with a lender and set a “strike” interest rate at which to lock in the loan, a good move considering rate volatility.
Several refinancing calculators are available online that let borrowers plug in all the required numbers and determine the monthly savings and how long it will take to recoup the expense of a refinancing.
Q: So is now the best time to buy a home?
A: It depends on personal situations. Homebuyers certainly have a lot of factors working in their favor right now—low interest rates, plenty of marked-down homes for sale and an extended and expanded federal tax credit that will expire in the spring.
On the flip side, there’s growing sentiment among analysts that housing prices, which are showing ever-so-minor improvement, may fall further. The reason? Lenders are expected to get better at determining which borrowers will qualify for loan modifications. That means lenders also will get faster at moving homes through the foreclosure process.
Mark Zandi, chief economist at Moody’s Economy.com, recently predicted that housing prices nationally will hit bottom in 2010’s third quarter. That means anyone buying a house now could see the value of their investment initially depreciate.
(c) 2009, Chicago Tribune.
Distributed by McClatchy-Tribune Information Services.
Read more: http://rismedia.com/2009-12-14/5-questions-to-consider-before-purchasing-a-home/#ixzz0ZykmxpPC
Popularity: 1% [?]
Foreclosure Filings Fall for Fourth Month
December 14, 2009
Foreclosure filings fell 8% in November 2009 from October, the fourth straight month of declines, RealtyTrac of Irvine, Calif., recently reported.
With one filing for every 417 houses nationally, November saw the lowest amount of foreclosure activity since February. The numbers, while 18% higher than the same month last year, were a result of “loan modifications and other foreclosure prevention efforts,” said RealtyTrac chief executive James J. Saccacio. He said the recently extended and expanded homebuyer tax credit was keeping a lid on home value depreciation.
Saccacio warned, however, that a full recovery will come only “when unemployment recedes to normal, healthy levels and when availability of credit reaches a more rational balance between the extremes of the past few years.”
Data from Integrated Asset Services of Denver showed values continuing to decline despite the buying boom fostered by the tax credit.
Home values actually declined 0.05% nationally in October from September, with the Northeast, especially metropolitan Boston, dragging the numbers down. The Northeast region fell 1.6%; the Middle Atlantic, 0.06%.
“I have no doubt that the tax credit persuaded some buyers to make their purchase sooner than they otherwise would have,” said Dave McCarthy, president and CEO of Integrated Asset Services. “It’s reasonable to think the broader market will reflect that reality at some point down the road.”
Although Saccacio credited loan modification efforts as helping slow the rate of foreclosures, a recent Treasury report on the Obama administration’s Making Home Affordable program showed the effort coming up woefully short in getting lenders to alter mortgage terms permanently. Programs to mitigate foreclosures are not having the desired impact, said Michael Feder, president of Radar Logic in New York, which tracks the housing market.
The Treasury Department reported that just 31,382 loans of the four million mortgages targeted had been modified permanently since the program began in February. There are 728,000 loans in “trial” modification. By some estimates, there is as much as $1 trillion in potential foreclosures already delinquent, Feder said. Lawmakers have been critical of the program, which they say is still focusing on the subprime-loan crisis of last year rather than mortgage foreclosures related to rising unemployment. They also have taken lenders to task, especially those who have taken government bailout money, known as TARP funds. Those lenders, however, have been reporting great success in modifying loans independent of the government program.
Resets of thousands of so-called exotic mortgages such as option adjustable-rate loans in 2010 “will undoubtedly lead to another wave of foreclosures as payments begin to double and triple,” said Sylvia Alayon, vice president of the Consumer Mortgage Audit Center in Fort Lauderdale, Fla.
“When principal balances go up and house values continue to plummet, refinancing will no longer be an option for homeowners in negative amortization,” she said.
(c) 2009, The Philadelphia Inquirer.
Distributed by McClatchy-Tribune Information Services.
Read more: http://rismedia.com/2009-12-13/foreclosure-filings-fall-for-fourth-month/#ixzz0ZfxMpKNf
Popularity: 1% [?]
Geithner: TARP Program Extended to October
December 9, 2009
Treasury Secretary Timothy Geithner announced Wednesday that the U.S. administration will extend the government’s financial bailout program until next fall.
In a letter to House and Senate leaders, Geithner said the extension is “necessary to assist American families and stabilize financial markets.”
Money from the $700 billion taxpayer-funded bailout program has helped rescue big Wall Street firms, auto companies and others. That’s angered many Americans, who feel the government hasn’t provided them with relief from high unemployment and rising home foreclosures.
Geithner said the Troubled Asset Relief Program that Congress passed in October 2008, will be extended until Oct. 3, 2010. He has the authority to extend the TARP simply by notifying lawmakers.
“The recovery of our financial system remains incomplete,” Geithner told lawmakers. “And, near-term shocks to that system could undermine the economic recovery we have seen to do.”
The Treasury secretary said new commitments bankrolled by the bailout fund will be limited to three areas next year.
One focus is stepping up efforts to curb record-high home foreclosures, a move necessary to stabilize the housing market and support a lasting economic recovery.
Another will be providing capital to small banks, which play a crucial role in providing credit to small businesses — normally a leading engine of job creation. But small banks have been weighed down by problem commercial real estate loans, which has made them reluctant to lend and hurt the ability of small businesses to expand and hire.
In a third area, Geithner said the government may boost its commitment to a program aimed at sparking lending to consumers and small businesses. Run by Treasury and the Federal Reserve, the Term Asset-Backed Securities Loan Facility, or TALF, started in March.
Geithner said he didn’t expect any new commitments to the TALF would result in additional costs to taxpayers.
Source: The Washington Times
Popularity: 1% [?]
Reuters: U.S. New Home Sales Rise Sharply in October
November 25, 2009
Sales of newly built U.S. single-family homes in October rose more than expected to their highest level in a year, data showed on Wednesday, pointing to a stabilizing housing market after a three-year slump.
The Commerce Department said sales jumped 6.2 percent to a 430,000 annual pace, the highest since September last year, from an upwardly revised 405,000 in September.
Analysts polled by Reuters had expected new home sales to climb to a 410,000 annual pace from September’s previously reported 402,000. The rise in sales pushed the supply of new homes on the market last month down to 239,000 units, the lowest since May 1971.
Source: Reuters
Popularity: 1% [?]
Reuters: Existing Home Sales Seen at Highest Since July 2007
November 20, 2009
Sales of existing U.S. homes likely rose for second consecutive month in October, reaching their highest level since July 2007, according to a Reuters poll, as buyers scrambled to take advantage of greater affordability and a first-time home buyer tax credit.
The survey of 29 economists predicted sales of previously owned homes climbed to a seasonally adjusted annual rate of 5.70 million, the fastest pace since 5.73 million units were sold in July 2007 and up from 5.57 million units in September.
Forecasts, however, ranged widely, from as low as a seasonally adjusted annual rate of 5.26 million to as high as 6.00 million units.
Existing home sales have been on an upward trend for most of this year and an increase in October would mark the sixth gain in seven months. Home sales typically pick up in the spring as warmer weather boosts activity, but the momentum continued into most of the summer and fall.
Consumers have come out in droves to take advantage of the federal government’s $8,000 first-time home buyer tax credit — part of the stimulus bill — which was originally set to end November 30.
The Obama administration recently extended the $8,000 first-time home buyer tax credit, added a $6,500 credit for home owners buying a new residence and increased income limits. Eligible borrowers must sign contracts by April 30 and close by June 30.
The lowest mortgage rates in decades and high affordability have also helped the housing market find some footing after a three-year slump. Home price declines have been moderating in many regions of the country and in some areas they have risen.
Improvement in the housing market bodes well for the U.S. economy, as it points to better demand in the sector where the first signs of the recession took root. But with distressed properties making up a high proportion of sales, there is widespread uncertainty about the sector’s long-term outlook.
To be sure, there is still a huge supply of unsold homes on the market and millions of more foreclosures are in the pipeline, which should continue to pressure prices.
The economic outlook is also crucial for housing demand and many potential buyers are staying sidelined due to unemployment or fear of losing their jobs. The U.S. Labor Department said the unemployment rate reached a 26-1/2-year high of 10.2 percent in October. Access to credit also remains tight.
While existing home sales are predicted to rise in October, declines are expected in the months following. Recent data indicates a sector that is still on shaky ground. The Commerce Department said new U.S. housing starts in October unexpectedly fell to the lowest level in six months, dropping 10.6 percent.
Existing home sales tally the number of previously constructed homes for which a sale closed during the month.
The National Association of Realtors will release U.S. existing home sales data on Monday at 10 a.m. (1500 GMT).
Source: Reuters
Popularity: 4% [?]
Americans More Unhappy With Feds’ Housing Fixes
November 12, 2009
Trillions spent on propping up banks, buying mortgages, tax credits and new programs designed to lower payments and prevent foreclosures. And yet a new survey from Move Inc., the parent of Realtor.com, says Americans are growing increasingly dissatisfied with how Washington is handling the housing mess.
The October 2009 survey found that the federal government’s approval rating by consumers on housing issues has slipped since March 2009. By a six-percent margin, Americans said they don’t think the government is doing enough to stabilize the housing market (48.2% compared to 42.2% five months ago). According to the survey, consumers still want low interest rates (31.4%) and action by the government to help homeowners prevent foreclosures (28.5%), the same two top priorities expressed by survey respondents in March.
The survey found that public participation in the programs to prevent foreclosures is much lower than anticipated. In March 2009, several days after the details of the Making Home Affordable program were announced; Move’s survey found that 17.6 percent of those interviewed said they intended to participate in the Administration’s program. Now only 8.8 percent said they actually did participate.
The number of consumers interested in investing in real estate has doubled since March. One out of eight (12.1%) homebuyers today plan to purchase a home as an investment property, compared to 5.6 percent seven months ago.
Fear of foreclosure is fading. In March 52.5 percent of all survey respondents said they were concerned that they or someone they know may face foreclosure in the next 6 to 12 months. That number dipped slightly to 45.1 percent in October.
The survey of 1,000 people was conducted the third week of October.
Source: BusinessWeek
Popularity: 1% [?]
Expanded Version of Tax Credit Will Allow More Homebuyers to Qualify
November 9, 2009
President Obama recently signed an expanded version of the $8,000 first-time homebuyer tax credit that was set to expire on November 30. “The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. “Although the tax credit remains at $8,000 for homebuyers that have not owned a primary residence in the last three years, it has been expanded to include a $6,500 tax credit for homebuyers that have lived in their current primary residence for at least five consecutive years out of the past eight years. Under the old rules, move-up homebuyers did not qualify.” Consider these three examples:
Example 1:
Jane purchased a home in 2002, lived there for 5 years as her primary home, moved out in 2007, and turned that home into a rental property. If Jane decides to buy a new primary residence today, she would qualify for the $6,500 tax credit based on the fact that she lived in the same residence as her primary home for at least five consecutive years out of the past eight.
Example 2:
Harry purchased a home in 2004, and lived there for the past 5 years as his primary home. If Harry decides to buy a new primary residence today, he would qualify for the $6,500 tax credit based on the fact that he lived in the same residence as his primary home for at least five consecutive years out of the past eight.
Example 3:
Nicole purchased a home in 2006, and lived there for the past 3 years as her primary home. If Nicole decides to buy a new primary residence today, she would not qualify for the $6,500 tax credit based on the fact that she did not live in the same residence as her primary home for at least five consecutive years out of the past eight.
The tax credit applies to homes purchased for less than $800,000 before May 1, 2010. “If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010,” Nicholas said. “It works kind of like a gift certificate that can be redeemed for cash. You simply file a form with the IRS right after you buy your home, and the IRS will send you a check for the full amount of your credit.”
The income limitation for single tax payers went up from $75,000 under the old rules to $125,000 under the new rules. For married tax payers, the income limitation went up from $150,000 to $225,000. “This means that more people will qualify for the credit – especially in parts of the country with higher costs of living,” Nicholas said. “This should help stimulate parts of the housing market that may not have been impacted by the old version of the credit.”
There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples:
-The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others
-If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit. (Note: In the case of married couples, both spouses must qualify for the credit).
-The credit applies even if you have co-signers on your mortgage loan
For more information, visit www.CMPSInstitute.org.
Read more here.
Popularity: 1% [?]
Latest Homebuyer Tax Credit: Pay More, Get Less
November 5, 2009
President Obama could sign the $10.8 billion homebuyer tax credit extension and expansion plan into law as soon as next week. The Senate this evening voted 98-0 in favor of the extension. The House is expected to approve it within days.
But a new report from Goldman Sachs suggests that the six-month extension might do little for the fragile housing market and could be even less effective than the soon-to-expire credit for first-time buyers that cost taxpayers about $8.5 billion and lasted nearly a year.
The Congressional proposal would give buyers until April 30, 2010 to sign purchase contracts and another 60 days to close. And it will no longer be just for first-time buyers. Homeowners who have lived in their current home for five of the last eight years can claim $6,500, under the new law, which would only apply to houses purchased after the current tax credit expires Nov. 30. Income limits will be more generous: $125,000 a year for individuals, $225,000 a year for married couples.
But Goldman Sachs economist Alec Phillips says, in a report released to clients Nov. 3, that the expanded program won’t raise home prices and sales much and likely won’t significantly trim the supply of unsold homes.
“The extension of the current credit will probably result in some incremental first-time buying but not as much as the last one,” Phillips said in a phone interview today. “The expansion to the other population of buyers [existing homeowners] will provide a small boost to prices, but no more than 1%.”
According to Phillips’ calculations, all but about 200,000 of the 1.4 million first-time buyers who claimed the credit this year would have purchased a home even without the incentive. And the credit resulted in boosting home prices only by about 1%(Phillips assumed in his calculation that home prices rose in part because sellers built a large portion of the credit into their asking prices).
The pool of first-time buyers who still need an incentive to get off the fence is likely small because many of them have already taken advantage of the now-expiring credit. Existing homeowners who qualify for the new $6,500 credit could spur additional sales. But the supply of unsold homes will remain unchanged because most homeowners will have to sell their existing home in order to buy a new one (The credit only applies to principal residences).
This doesn’t mean that the credit is useless, only that it is inefficient. For one thing, it could stimulate the economy by giving consumers more money to spend. (Economist Simon Johnson argued in the Washington Post last week that the tax credit is both inefficient as a homebuyer incentive and as a economic stimulus).
“We were not arguing that [the expanded credit] would have no effect,” Phillips said. “Just will the effect be as great as last one?”
Source: BusinessWeek
Popularity: 1% [?]
Corinth Mississippi
Categories
Most Popular Pages...
- 100% Jumper Realty & Associates, LLC
- 62% Virtual Tours
- 44% Search MLS
- 10% Full Listing
- 9% REALTOR® Directory
Recent Posts
Recent Comments
- Debt Managment Credit Counseling | Debt Relief Options Of 2010 – Credit Counseling Vs Debt Settlement on Really, What Is a Credit Score?
- Federal Home Loan Bank of Dallas Awards Record-Breaking $18.5M in Affordable Housing Grants | Government Grants for Citizens on Top Seven Reasons Banks are Denying Home Loan Requests
- Top Seven Reasons Banks are Denying Home Loan Requests : Jumper … Counseling on me on Top Seven Reasons Banks are Denying Home Loan Requests
- Real Estate and Homes for Sale Information on 5 Smart Reasons to Buy a Home Now
- How to get a 5 dollar credit card free? | Accept Credit Cards on Home Buyers Who Missed 8,000 Dollar Tax Credit Coming Out Ahead
Website Tags... Search here.
WP Cumulus Flash tag cloud by Roy Tanck and Luke Morton requires Flash Player 9 or better.