Archive for May, 2010
Beyond The Headlines
May 8th, 2010 categories: Buyer's Advice
CNN Money
How to buy a foreclosure
Many buyers, especially first-timers, hope to purchase a foreclosed property at a bargain price. While purchasing a foreclosed home can be a wise choice for some buyers, it is important that buyers understand the differences in buying at different stages of foreclosure and be prepared to take on the challenges typically associated with each.
KEEP THIS IN MIND
• There are three basic stages of foreclosure in California: Pre-foreclosure, trustee’s sale, and repossession, often called an REO or real estate owned by the bank.
• Pre-foreclosure homes are in the foreclosure process, but have not yet been auctioned. Owners of pre-foreclosed homes often try to sell the properties because they are “underwater,” meaning they owe more on the mortgage than the home currently is worth. Many homeowners attempt to sell via short sale, where the lender must agree to accept less than the amount owed on the mortgage. Buying at this stage of foreclosure often is a complicated and slow process. However, buyers of pre-foreclosed properties often are given the opportunity to inspect the home prior to purchasing, whereas this is not always the case when buying at other stages of foreclosures.
• The second basic stage of foreclosure is the public auction at a trustee’s or foreclosure sale. Homes in this stage often are well priced, but also come with challenges to buy. These homes may not be available for inspection and buyers may later discover the property needs numerous repairs. As a result, many of the homes at auction are purchased by investors and contractors who have experience working with homes needing numerous repairs, or taken back as REO by the foreclosing lenders.
• If a home does not sell to a third party at the trustee’s auction, the bank takes the property–the final stage of the foreclosure process. Although homes in this stage typically do not offer buyers the best prices, buyers generally can perform a thorough inspection of the property prior to closing.
To read the full story, please click here:
The New York Times
The importance of watching home equity Homeowners with secure jobs and no immediate plans to move will often watch mortgage rates anyway, just in case they have the opportunity to refinance their loans. But few of them will regularly bother to check housing sales or foreclosures, which also could effect their ability to refinance.
To read the full story, please click here:
http://www.nytimes.com/2010/05/02/realestate/02mort.html?ref=realestate
The Wall Street Journal
Why Americans get ripped off on mortgage loans You might think that Americans would have learned over the past few years that home mortgages can be dangerous products, to be approached warily, only after careful study and consideration. You’d be wrong.
To read the full story, please click here:
http://blogs.wsj.com/developments/2010/04/29/why-americans-get-ripped-off-on-mortgage-loans/
Los Angeles Times
Pending home sales rise 5.3 percent in March
The number of buyers who signed contracts to purchase U.S. homes surged more than expected in March, another sign that government incentives are propelling the housing market this spring.
To read the full story, please click here:
http://www.latimes.com/business/la-fi-home-sales-20100505,0,7504300.story
CNN Money
Fannie Mae to make qualifying for interest-only loans tougher
Fannie Mae, the government-backed mortgage giant, announced Friday that it would tighten lending requirements for the interest-only loans and adjustable rate mortgages (ARMs) it backs.
To read the full story, please click here:
http://money.cnn.com/2010/04/30/real_estate/Fannie_okays_interest_only_loans/index.htm
Sacramento Bee
California home buyer tax credit takes effect
Just as one government home buyer tax credit program ends, another begins. The home buyer tax credit signed into law in March by Gov. Arnold Schwarzenegger now is available.
To read the full story, please click here:
http://www.sacbee.com/2010/05/01/2718894/california-homebuyer-tax-credit.html
Bloomberg
Homeowners who default by choice rise to 12 percent
Decisions by U.S. homeowners to walk away from mortgages they can afford account for an increasing share of defaults, according to Morgan Stanley.
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Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®
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Beyond the Headlines
May 8th, 2010 categories: Buyer's Advice, Seller's Advice
Should you buy or rent a home? Cost gap narrows
Affordable home prices and low interest rates have created an ideal time for many buyers to purchase homes, and now a new week-long look at homeownership confirms it. The national study, conducted for The Associated Press, shows that the difference between monthly rents and mortgage payments is at its lowest level in nearly 20 years.
KEEP THIS IN MIND
• The analysis of 45 metro areas found the difference between the monthly mortgage payment on a median-priced home and the median rent has declined to $256. In some areas, the difference is as low as $100, according to the study. The last time the price gap was that close was in 1993, when it decreased to $264.
• The study, conducted by Marcus & Milichap Real Estate Investment Services, used median prices for the last three months of 2009 and calculated mortgage payments by assuming a 10-percent down payment and a 30-year fixed loan at 5.07 percent. It also assumed borrowers paid for private mortgage insurance and didn’t include repair costs and tax benefits.
• Although the difference between monthly rent and monthly mortgage payments is at its lowest level in nearly 20 years, more stringent lending standards have made the home-buying process more challenging. Home buyers can prepare by ensuring their credit reports are up to date and saving for a down payment of at least 20 percent. Borrowers putting down less than 20 percent likely will have to purchase private mortgage insurance.
• Owning a home has significant tax benefits, including deductions for property taxes and loan interest. Homeowners also can enjoy building equity and creating a means of forced savings as they pay down the principal on the home.
• Although home buyers should not focus solely on future home price appreciation, according to data collected by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) over the last 40 years, homeowners who purchase a median-priced house, live in it for at least five years, and sell it at the then-current median price, have averaged an annual rate of return of more than 11 percent.To read the full story, please click here:
http://www.dailynews.com/business/ci_14916092
In Other News…
San Francisco Chronicle
Good timing could reap double tax credits Some home buyers in California could get a federal tax credit worth up to $8,000 plus a new state credit worth up to $10,000 if they time their purchase just right. To read the full story, please click here:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/01/BU9G1CNTVN.DTL&tsp=1
The Wall Street Journal
Why it may be time to refinance your loan With the Federal Reserve out of the mortgage market and the economy gaining strength, some economists are warning that mortgage rates, still near historic lows, will soon start to rise.
To read the full story, please click here: http://online.wsj.com/article/SB10001424052702304830104575172032313214888.html?KEYWORDS=refinance
Los Angeles Times
Consumer loan delinquencies decline again in fourth quarter
In a positive sign for the economy, a bankers group said that delinquencies on consumer loans declined in the last three months of 2009, marking the second consecutive quarter or improvement, and a sampling of data suggests the trend has continued this year.
To read the full story, please click here:
http://www.latimes.com/business/la-fi-delinquent-loans8-2010apr08,0,1397148.story
The Wall Street Journal
Reverse mortgages now look cheaper
Reverse mortgages have long been considered one of the most expensive ways to extract cash from your house. But that is changing as some of the country’s biggest reverse-mortgage lenders are slicing closing costs—helping even some affluent homeowners who want to generate additional income.
To read the full story, please click here:
The Wall Street Journal
Second mortgages vex borrowers
Banks are coming under increasing political pressure to write off or at last write down second-lien and other junior mortgages as a way to help borrowers keep their homes or extract themselves from heavy debt.
T o read the full story, please click here:
CNN Money
10 foreclosures for every home saved
The Obama administration’s mortgage-modification program is not keeping pace with the deluge of foreclosures hitting the market, a government watchdog found.
To read the full story, please click here:
http://money.cnn.com/2010/04/14/real_estate/COP_foreclosure_mitigation_report/index.htm
North County Times
Economists say California tax credit won’t last through May
New home buyers will burn through the California state tax credit no later than May 20th, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
To read the full story, please click here:
http://www.nctimes.com/business/article_5fb80b8a-7e42-500f-ad3d-bc3851850f15.htm
What you should know about the market:
Home buyers waiting for a mortgage loan to fund are advised to be conservative when it comes to buying new furniture, appliances, or the like for the house they are purchasing. It has become standard practice for lenders to check borrowers’ credit scores in the weeks leading up to the closing, sometimes even the day prior to closing. Large purchases can use up a considerable proportion of a borrower’s total credit limit, which can lead to a drop in the borrower’s FICO score and possibly change the terms of the loan.
Many homes currently on the market are distressed properties—foreclosures and short sales—which increases the importance of home inspections. According to the America Society of Home Inspectors, the owners of distressed properties usually didn’t have the money to maintain their homes and often deferred property maintenance. A home inspection can find problems with the foundation, electrical, plumbing, roof, attic insulation and heating and air conditioning. Although home inspections can be costly, in the long run, home buyers will be better situated when they know what, if anything, needs repairing on the home.
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