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It’s safe to sell your home again

It’s safe to sell your home again
While analysts debate when the housing market will hit bottom, for a surprising number of cities the turnaround has already begun.  In December, prices rose in 109 of the 384 metro areas tracked by data firm CoreLogic. 

Making sense of the story

  • There are certain signs to help determine if a particular neighborhood is on the verge of a rebound.  For instance is local employment on the upswing?  That’s a critical factor for a region to get itself on the path to recovery.  Improving jobs picture has led to shrinking housing stock across the country, as investors and bargain hunters have started buying up foreclosures that have been preventing a recovery.
  • For years, buyers were scared of overpaying for a home, but less so now.  Many buyers have grown accustomed to thinking they’ll score deals, so they tend to act slowly, and typically start bidding around 10 percent to 15 percent below list price.  However, a growing number of buyers are beginning to realize that if they wait too long in this market, they may miss out.
  • Sellers can hold firm on price if they’re patient.  The days of having to deal with low-ball offers are coming to an end.  The higher the price, the more patient the seller must be.  Cheaper homes are affordable to more buyers and appealing to investors, so recoveries usually start there. 
  • Sellers should keep in mind that while they don’t have to placate low-ball offers anymore, they also can’t shoot for the moon either.  Working with a REALTOR® and setting a realistic price from the get-go is key.
  • Sellers should know what they’re competing against.  Homeowners should let their home’s value dictate the price.  While this may seem self-evident, some owners may have lost sight of it during the bust.  On the one hand, some sellers clung to the false hope of a return to boom prices, so they set prices unrealistically high.  Others may have gone too far the other way, and set their price too low.
  • It’s also important that sellers understand they’re no longer competing with gutted foreclosures.  Buyers are tired of looking at worn-down, neglected, distressed properties and often don’t have much extra money to do a lot of fixing up.  REALTORS® often report their clients are willing to pay a little more for a home that’s ready to move into.

Read the full story from CNN here: http://money.cnn.com/2012/04/19/real_estate/housing-market.moneymag/index.htm?iid=HP_River

Americans More Optimistic About Housing, Economy

Americans’ concerns over housing and the economy are subsiding, according to Fannie Mae’s National Housing Survey from February.

An improving job market is a big part of what’s behind Americans feeling more confident about the housing market and the direction of the economy, according to the survey.

“The pickup in the pace of hiring over the past few months has helped soothe consumer concerns, lifting their moods regarding their personal finances, the direction of the economy, and their views on the housing market,” says Doug Duncan, chief economist of Fannie Mae. “As a result, we’ve seen more potential for economic upside, creating a more balanced near-term outlook.”

The survey found that 28 percent of Americans expect home prices to increase over the next 12 months while 53 percent say prices will likely stay the same. Fifteen percent say they expect home prices to decline.

Meanwhile, the majority of those surveyed see rental prices continuing to increase over the next year.

Sixty-five percent of those surveyed say that if they were going to move they’d buy their next home; 29 percent say they would rent.

With low mortgage rates and falling home prices, 70 percent of those surveyed say now is a good time to purchase a home. Also, more Americans surveyed say now is a good time to sell, rising to 13 percent in February, which is the highest level in more than a year but still low by historic standards.

Overall, Americans expressed more confidence about their personal financial situation, with only 12 percent saying they expected their personal financial situation to worsen in the next 12 months — which is the lowest number in more than a year.

Source: Fannie Mae 

This article is by RealtorMag.org

Foreclosure backlogs persist

The improving job market and economy is helping push mortgage delinquencies and foreclosure starts down, but the percentage of loans in the foreclosure process remains stubbornly high, especially in states most affected by robo-signing issues, according to a quarterly survey of lenders by the Mortgage Bankers Association.

Since peaking at 10.1 percent in March 2010, the percentage of borrowers behind on their house payments has fallen to a seasonally adjusted 7.6 percent at the end of 2011 — about halfway to the pre-recession average of roughly 5 percent, said MBA Chief Economist Jay Brinkmann.

The percentage of loans entering the foreclosure process — which before the downturn averaged just under 0.5 percent — has also declined, from a peak of 1.4 percent at the end of third-quarter 2009 to 1 percent at the end of fourth-quarter 2011.

But at 4.4 percent, the percentage of loans in the foreclosure process at the end of 2011 was not far off the all-time high of 4.6 percent seen at the end of 2010. That compares to the long-term norm of roughly 1.2 percent.

Robo-signing issues — which lenders hope to put behind them this year as they implement recently announced settlement with state attorneys general — have created foreclosure backlogs.

While foreclosure starts are falling, it’s taking loan servicers longer to auction off or repossess homes once they enter the foreclosure process, particularly in states where courts oversee the process.

In “judicial foreclosure” states where courts handle most foreclosures, 6.8 percent of mortgages were in foreclosure at the end of 2011. In “nonjudicial” foreclosure states where most foreclosures are processed outside of the court system, loan servicers are clearing the backlog more quickly, and 2.8 percent of mortgages were in foreclosure.

The MBA survey covers 42.9 million loans on one- to four-unit residential properties, or about 88 percent of all first-lien mortgages. Extrapolating the survey’s results suggests that of the 48.75 million mortgages outstanding at the end of 2011, 2.13 million were in the foreclosure process.

Five states accounted for more than half of all loans in foreclosure — Florida, California, Illinois, New York and New Jersey. All but California are judicial foreclosure states.

The 10 states with the greatest percentage of mortgages in foreclosure were: Florida (14.27 percent), New Jersey (8.21 percent), Illinois (7.41 percent), Nevada (7.03 percent), Maine (5.92 percent), New York (5.88 percent), Connecticut (5.05 percent), Hawaii (4.97 percent), Ohio (4.94 percent), and Indiana (4.94 percent). All but Nevada are judicial foreclosure states.

The states with the lowest foreclosure rates were: Wyoming (1.03 percent), North Dakota (1.05 percent), Alaska (1.06 percent), Nebraska (1.55 percent), South Dakota (1.75 percent), Montana (1.76 percent), Texas (1.78 percent), Virginia (1.84 percent), Alabama (1.94 percent), and Arkansas (1.97 percent). Among those states, only North Dakota handles foreclosures judicially.

Rise in Home Sales Signifies Strengthening Market

The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

While admitting home sales “are still very low,” Paul Dales, chief economist at Capital Economics, says “it is clear that housing recovery is now well underway.”

The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December.

Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with Dales’ assessment, saying “The pattern of home sales in recent months demonstrates a market in recovery.”

Yun suggests consumers are gaining confidence from “record low mortgage interest rates, job growth and bargain home prices.”

In addition to the 5 percent increase in December, NAR reported a 1.7 percent annual increase in existing-home sales in 2011, a total of 4.26 million homes for the year.

Distressed homes made up 32 percent of sales in December, according to NAR’s existing home sales report for the month.
Foreclosed home sales closed at about 22 percent below market rate in December, a discount 2 percent higher than that recorded a year earlier.

Investor demand remains steady with 21 percent of homes sold in December going to investors after this category of buyers took 19 percent of purchases in November and 20 percent one year ago.

Cash sales – commonly linked to investors – made up 31 percent of December’s existing-home sales. This rate was 28 percent in November and 29 percent a year ago.

Purchases by first-time home buyers declined in December – both from the previous month and the previous year. First-time home buyers accounted for 31 percent of purchases in December, down from 35 percent in November and 33 percent in December 2010.

Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently.

“The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future,” Yun said.

However, listed inventory is only part of the equation, and according to CoreLogic’s latest numbers, shadow inventory stands at about 1.6 million.

Regardless, Dales believes sales will rise this year. “Housing still won’t contribute much to GDP growth over the next few years, but at least it will no longer subtract from it,” Dales says.

Is it a “Happy New Year” for the Housing Market?

Goodbye 2011 & Hello 2012! Is this a Happy New Year?

Is it goodbye to a bad year or hello to the same?  While the economy is still struggling, unemployment slightly better, and real estate showing signs of improvement only to retract its position, I believe the glass is still half full, with an asterisk.

What's in store for 2012's housing market?The holiday season began strong on Thanksgiving weekend, reports are that retailers numbers receded which led to heavy markdowns the week of Christmas. Final numbers are still to come, while job growth is modest, mostly in low-paying sectors like retail and hospitality. This past year also saw an increase in credit card spending for gifts as a result of higher gasoline, food prices, and general inflation.

With mortgage rates still at historic low rates, the housing industry is still struggling with values dropping, even though sales have shown signs of recovery. With more than one in every five borrower still owing more than their home is worth, many homeowners are too pressed to spend on much more than the essentials which leave us to the big question: WHAT SHOULD I DO?

With all predictions expecting more of the same this year as last, there is still and always will be optimism, but each homeowner out there who is still upside-down, either waiting for or in a modification, is so far upside down that they most likely will never recoup the past negative equity in the future.  They are at the same time struggling to make ends meet with just the essentials. Mortgage companies and investors are still holding the belt tight and are not reducing principle for most people waiting for  modifications or who have them–leaving homeowners to finally make that decision that enough is enough.

There are opportunities to purchase and leave your upside-down home, but you would need to act fast. Other opportunities are also available and action now will help you live a life more care-free and stress-free in a fast-paced, ever-uncertain economic time.

Call me now and let’s talk. My direct line of contact is 619-890-3648.

God Bless

Six must-haves for mortgage approval

Interest rates are hovering around historical lows, and low interest rates increase affordability, making it easier for buyers to qualify. Yet stories of buyers waiting months to gain loan approval and home purchase transactions not closing on time due to lender’s strict underwriting are all too common.

Some buyers are turned down for illogical reasons. For instance, if you have investments — even if they’re performing well — an underwriter might deny the mortgage because your portfolio doesn’t fall into the underwriter’s risk assessment model.
checklist
One couple was turned down because the husband had worked at his current job for less than a year — even though he was making more money at the new job than he was before.

These buyers were well-qualified. The wife had worked several years for one employer and was able to qualify for the loan on her own. So, the transaction closed, although two months late.

Generally, it’s more difficult to qualify now than it was a year ago. Most conventional lenders require a 20-25 percent down payment. For the lowest interest rates, your credit scores need to be in the 700 range. You need to have verifiable income and cash reserves in addition to your down payment and closing costs.

You could run into underwriting problems if you’re self-employed, as W-2 income is much easier to verify. Other hurdles are lapses in employment and owning a lot of property. Some lenders won’t lend to buyers who have more than three or four residential properties.

If you’re buying a new home before selling your current home, you’ll need to have 30 percent equity in your current home. This needs to be verified by the lender’s appraiser. Also, the lender will want to see a copy of the cashed check from the tenant for the first month’s rent to verify rental income if needed to qualify.

HOUSE HUNTING TIP: As soon as you’re serious about buying a home, find the best mortgage broker or loan agent you can to assist you. Don’t make your selection based on interest rates alone. A good track record counts for a lot.

Closing the deal should be your primary goal. If you have to pay 0.25 percent more to assure your transaction closes on time and that you’re not turned down at the last minute, it’s worth it.

Be candid with your loan professional about anything in your financial picture that might impact loan qualification. A good loan agent or broker will be able to assess your financial situation and anticipate what you’ll need to do to satisfy the underwriter.

Be aware that appraisal issues can impact your loan approval. For example, if a previous owner added square footage without a building permit, the additional square footage probably won’t be included as livable square feet.

If the appraisal comes in for less than the purchase price, the lender might not lend you enough to close the deal. Include an appraisal contingency in your contract.

There are more jumbo financing options available now. Adjustable-rate mortgages that are fixed for 10 years and then revert to an adjustable have a starting rate about 0.25 percent less than a 30-year fixed jumbo. A five-year fixed starts about 0.5 percent to 0.75 percent lower, but is riskier.

THE CLOSING: Because of the risk factor, the lender may want you to have a large cash reserve. Your retirement account counts toward this.

Dian Hymer is a real estate broker with more than 30 years’ experience and is a nationally syndicated real estate columnist and author.

Top six reasons mortgage applications are rejected

Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. All told, the Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.

Want to avoid falling into that number? It’s tough — especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.FFIEC

1. Income issues. Most failed applications falling into this category have income too low for the mortgage amount they are seeking; often, a spouse’s credit issues can create this problem, too, as the income the spouse plans to actually chip in toward the mortgage cannot be considered by a lender.

But increasingly, the recent vagaries of the job market are also causing this issue, as people who have changed their line of work or have changed from salaried employee to freelancer over the last couple of years can also have their home loan applications rejected based on income.

2. Muddled money matters. If the mortgage for which you’re applying plus your monthly payments on credit card, car and student loan debts will comprise more than 45 percent of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income — all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.

3. Credit issues. Today, the mortgage-qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.

4. Property didn’t appraise. Since the whole industry had its hand smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up — some would say, even more than overall mortgage guidelines. So, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller.

This is especially common in the refinance realm, as well over a quarter of U.S. homes are now upside-down, meaning the mortgage balance owed is greater than the value of the home.

5. Condition problems. With all the distressed properties on the market, and with most non-distressed sellers barely breaking even, more home-sale transactions than ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot.

And in the world of condos and other units that belong to a homeowners association, if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.

6. Technical difficulties with application. The days when lenders just took your word for it are long, long gone. Applications with incomplete or unverifiable information are doomed.

If any of these mortgage loan application glitches arise in your homebuying or refinancing process, it’s critical that you connect with your mortgage professional, be it your banker or mortgage broker, to determine what course of action to take.

In some cases, it might be as simple as buying a stove you find at Craigslist and installing it before escrow closes; but with income issues your mortgage pro will need to help you determine whether it makes sense to pay some bills down, get a co-signer, or even wait six months so your income documentation will qualify.

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.

California housing affordability rises in Q3

California Building Industry AssociationHousing affordability increased in 22 of the state’s 28 metropolitan areas in the third quarter, according to the California Building Industry Association’s Housing Opportunity Index (HOI).

On a statewide basis, the HOI found that a family earning the median income could have afforded 63.5 percent of the new and existing homes that were sold during the third quarter, up from 61.3 percent in the second quarter.

The San Francisco, San Mateo and Marin County metro area was once again California’s least-affordable metro area for the twelfth consecutive quarter, and second in the nation, with just 32.9 percent of the homes sold being affordable to a family earning the median income, up from 27.5 percent in the second quarter. Orange County was California’s second least-affordable market and fifth in the nation (43 percent), followed by Los Angeles County (45.1 percent) and Santa Cruz County (47 percent).

Read the article from the California Building Industry Association here: “California Housing Affordability Rises in Third Quarter, CBIA Announces“.