3 ways low mortgage rates can work for you

Posted on December 15, 2010 by Green and Company

By Sarah Max, November 2, 2010

(MONEY Magazine) — Just when it looked as if mortgage rates couldn’t fall any further, they did.

Rates on 30-year fixed-rate mortgages (excluding jumbos) hit an average of 4.3% in September, the lowest level since 1953, according to Freddie Mac, and are still hovering below 4.5%.

Fifteen-year rates are even more mouthwatering: 3.8%. Mind you, those are averages. The most creditworthy borrowers can do even better, snagging rates perhaps a quarter of a percentage point lower.

So what’s in this for you? A lot, potentially. If you have a credit score of 720 or higher and at least 20% equity in your home, you might use these crazy-low rates to shorten your mortgage term, free up cash, or even add to your real estate holdings, for example.

Whatever you decide, don’t wait too long.
Home prices expected to slide another 8%

“The consensus is that rates will gradually move up in the new year,” says Frank Nothaft, chief economist for Freddie Mac. Freddie projects that the average 30-year fixed will hit 5% by the end of 2011.
Get mortgage-free relief sooner

It’s easy to see why more than a quarter of borrowers today are choosing a 15-year mortgage, according to analytics firm Core-Logic, up from about 9% in 2007. A 15-year lets you save in two ways: You get a rate that’s about half a percentage point lower than that of a standard 30-year, plus you can save tens of thousands by retiring the loan in half the time.

Let’s say you took out a $270,000, 30-year mortgage at 5.9% when you bought your house in 2005. You’re paying $1,596 a month in principal and interest and now have a $250,000 balance.

Let’s further assume that you roll $5,000 in refinancing costs into a new 15-year mortgage at 3.8% (so the loan is for $255,000). Your new monthly payment will be a heftier $1,860, but you’ll save more than $147,000 in interest over the life of the loan.

What if you can’t manage the bigger monthly bite? Refi to another 30-year and simply pay more in months when you’re able to, assuming you’re disciplined enough to actually follow through with that plan.

Given that few new mortgages carry prepayment penalties anymore, kicking in extra money shouldn’t be a problem, says Keith Gumbinger, vice president of mortgage data tracker HSH Associates.

Caveat: If you have only a few years left on your current mortgage, or you plan to move soon, a refi may not pay off. Calculate how long it will take to break even on your closing costs, up to three years is typical.
Improve cash flow

Freeing up cash may be your biggest priority right now. Maybe you’re trying to replenish your emergency fund after being out of work, or you have lots of high-interest credit card debt to pay off.

Maybe your twins got into Harvard, and you need to cover some of the tuition out of current income. Or maybe you see enough investment opportunities around that you want to lower your monthly payment and invest the difference.

In those cases, choose a 30-year loan. Using the previous example, if you refinance to a $255,000 30-year at 4.4%, you’ll lower your monthly payment from $1,596 to $1,277.

True, you won’t save nearly as much in interest as you would with a 15-year. But that’s not so bad, says Matthew Keeling, a certified financial planner in Mashpee, Mass., as long as you do something smart with the extra $319 a month you’ll save.
Double down on real estate

Do your retirement plans call for moving to a house near the beach or a cabin in the mountains? If you can afford another mortgage payment, you may want to start your search now, while rates are in your favor and prices are depressed. Ditto if you’ve been wanting to buy a second home or an investment property, says Jonathan Bergman, vice president of Palisades Hudson Financial Group in Scarsdale, N.Y.

Assuming you’re buying the place as a true second home, lenders generally charge the same rate they would for a primary residence. But if you intend to rent the place out, even if just for a few years until you retire and you need rental income to qualify for the mortgage, it’s considered an investment property.

And mortgage rates on investment properties are running about a half to a full percentage point higher. Still, the numbers are “pretty compelling,” says Justin Krane, a certified financial planner in Los Angeles.

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Strong Rebound in Pending Home Sales

Posted on December 12, 2010 by Green and Company

By Walter Molony , Realtor.org, Washington, DC, 12/02/2010

Pending Home Sales Are UP !

Pending home sales jumped in October, showing a positive uptrend since bottoming in June, according to the National Association of REALTORS®.

The Pending Home Sales Index,* a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009, which was the highest level since May 2006 when it hit 112.6.

Last October, first-time buyers were motivated to make offers before the initial contract deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said excellent housing affordability conditions are drawing home buyers. “It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011,” he said.

“More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery,” Yun said. Recent loan performance data from Fannie Mae and Freddie Mac clearly demonstrates very low default rates on recently originated mortgages, much lower that the vintages of 2002 and 2003 before the housing boom.

The PHSI in the Northeast jumped 19.6 percent to 71.3 in October but is 27.3 percent below the tax credit peak in October 2009. In the Midwest the index surged 27.3 percent in October to 81.7 but is 24.8 percent below a year ago. Pending home sales in the South rose 7.1 percent to an index of 93.8 but are 18.4 percent below October 2009. In the West the index slipped 0.4 percent to 104.3 and is 15.6 percent below a year ago.

Near term, Yun expects home sales will continue to climb from their cyclical low this past summer. “Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability,” he said. “Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them. Home owners already pay between 80 and 90 percent of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed.”
———————-
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

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September Existing-Home Sales Show Another Strong Gain

Posted on November 1, 2010 by Green and Company

Washington, October 25, 2010

Home Sales Continue To Climb

Existing-home sales rose again in September, affirming that a sales recovery has begun, according to the National Association of Realtors® (NAR).

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, jumped 10.0 percent to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, but remain 19.1 percent below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November.

Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.35 percent in September from 4.43 percent in August; the rate was 5.06 percent in September 2009.

The national median existing-home price for all housing types was $171,700 in September, which is 2.4 percent below a year ago. Distressed homes3 accounted for 35 percent of sales in September compared with 34 percent in August; they were 29 percent in September 2009.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22 percent less than five years ago when they were bid up by the biggest housing rush on record.”

To illustrate the jump in housing affordability, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.

Housing affordability conditions today are 60 percentage points higher than during the housing boom, so it has become a very strong buyers’ market, especially for families with long-term plans. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home – this is truly an example of how homeownership builds wealth over the long term,” Golder added.

Total housing inventory at the end of September fell 1.9 percent to 4.04 million existing homes available for sale, which represents a 10.7-month supply4 at the current sales pace, down from a 12.0-month supply in August. Raw unsold inventory is 11.7 percent below the record of 4.58 million in July 2008.

“Vacant homes and homes where mortgages have not been paid for an extended number of months need to be cleared from the market as quickly as possible, with a new set of buyers helping the recovery along a healthy path,” Yun said. “Inventory remains elevated and continues to favor buyers over sellers. A normal seasonal decline in inventory is expected through the upcoming months.”

A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in September, almost unchanged from 31 percent in August. Investors were at an 18 percent market share in September, down from 21 percent in August; the balance of purchases were by repeat buyers. All-cash sales were at 29 percent in September compared with 28 percent in August.

More Homes Sold Again!

Single-family home sales increased 10.0 percent to a seasonally adjusted annual rate of 3.97 million in September from a pace of 3.61 million in August, but are 19.5 percent below the 4.93 million level in September 2009. The median existing single-family home price was $172,600 in September, down 1.9 percent from a year ago.

Existing condominium and co-op sales rose 9.8 percent to a seasonally adjusted annual rate of 560,000 in September from 510,000 in August, but are 16.2 percent lower than the 668,000-unit level one year ago. The median existing condo price5 was $165,400 in September, down 6.2 percent from September 2009.

Regionally, existing-home sales in the Northeast increased 10.1 percent to an annual pace of 760,000 in September but are 20.8 percent below September 2009. The median price in the Northeast was $239,200, which is 1.4 percent below a year ago.

Existing-home sales in the Midwest jumped 14.5 percent in September to a level of 950,000 but are 26.4 percent below a year ago. The median price in the Midwest was $139,700, down 5.2 percent from September 2009.

In the South, existing-home sales rose 10.6 percent to an annual pace of 1.77 million in September but are 14.9 percent lower than September 2009. The median price in the South was $149,500, down 2.6 percent from a year ago.

Existing-home sales in the West increased 5.0 percent to an annual level of 1.05 million in September but are 16.7 percent below a year ago. The median price in the West was $213,600, which is 4.9 percent lower than September 2009.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

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Rates on 30-Year Mortgages Plumb New Depth, at 4.19%

Posted on October 18, 2010 by Green and Company

By Nathan Becker, The Wall Street Journal, 10/15/2010

30 Year Rates at 4.19%, These Are The Lowest Mortgage Rates Since 1951

Longer-term mortgage rates declined the past week, with the average rate on 30-year fixed-rate mortgages furthering its all-time low for the third consecutive week to 4.19%, according to Freddie Mac’s weekly survey of mortgage rates.

The 30- and 15-year fixed-rate mortgages and the five-year adjustable-rate all sit at their record lows, with Freddie tracking the 30-year since 1971, the 15-year since 1991 and the five-year since 2005. Freddie said that using data from the Federal Housing Administration, the last time the 30-year was this low was April 1951.

Rates have slumped for months, setting record lows in the process, as yields on Treasurys have fallen amid economic uncertainty. Mortgage rates generally track the yields, which move inversely to Treasury prices.

The 30-year fixed-rate mortgage averaged 4.19% for the week ended Thursday, down from the prior week’s 4.27% average and 4.92% a year ago. Rates on 15-year fixed-rate mortgages were 3.62%, falling from 3.72% and 4.37%, respectively.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.47%, flat on the week and down from 4.38% last year. One-year Treasury-indexed ARMs were 3.43%, up from 3.4% the prior week but down from 4.6% a year earlier.

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The World’s Smallest Homes

Posted on October 14, 2010 by Green and Company

By Melissa Dittmann Tracey, REALTOR® Magazine

Tiny House Interior

“Thin is in” when it comes to home design, writer Leah Konen with pointclickhome.com reminds us in the article 12 of the Narrowest Homes in the World. Homes are shrinking and architects are getting creative in designing small spaces that don’t make you feel boxed in.

I stumbled across this story featuring some of the narrowest homes in the world, such as a 3-feet wide by 33-feet high house in Madre de Deus, Brazil. Now that is small!

It just goes to show that it doesn’t matter how small a lot, a home can be squeezed anywhere. Read the article and view the images here.

Also, take a peek inside a tiny home by watching this YouTube video below from CBS about Jay Shafer, the creator of the 120-square-foot house with Tumbleweed Tiny House Co. See how he’s transforming small living right in backyards across the country.

tiny house video

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Nearly Eight Out of 10 Still Believe Buying a Home Is a Good Financial Decision

Posted on October 11, 2010 by Green and Company

Happy New Home Buyers

WASHINGTON (October 6, 2010) –

Nearly eight out of 10 respondents believe buying a home is a good financial decision, despite ongoing challenges with the economy and housing market. That’s according to the 2010 National Housing Pulse Survey, an annual report released today by the National Association of Realtors.

The survey, which measures how affordable housing issues affect consumers, also found job security concerns to be the highest in eight years of sampling, with 70 percent of Americans saying that job layoffs and unemployment are a big problem in their area; eight in 10 cite these issues as a barrier to homeownership.

“The real issue facing the nation’s economy right now is that many Americans can’t find meaningful work to support their families,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “While a job recovery is what’s needed right now to get the economy and housing market back on the right track, owning a home continues to be part of the American Dream and one of the best long-term investments in your future.”

Despite economic uncertainty, 68 percent of those surveyed still believe now is a good time to buy a home; while that number is down from last year (75 percent) it’s up from 2008 (66 percent) and 2007 (59 percent).

Lower home prices and record-low mortgage interest rates may be attracting buyers to the housing market – more than one-fourth of renters said they are thinking more about buying a home than they were a year ago. Sixty-three percent of renter respondents said that owning a home is a priority in their future; and nearly 40 percent said it was one of their highest priorities.

Lower home prices have improved affordability. In fact, the percentage of renters who are worried that the cost of housing is getting so unaffordable that they will never be able to buy a home has decreased steadily since 2007, from 63 to 57 percent.

Despite improved affordability, 79 percent of respondents still consider having enough money for down payment and closing costs to be among of the biggest obstacles to buying a home. Another obstacle is a lack of confidence in their ability to be approved for a loan, reported by 73 percent of respondents.

The good news is that Americans are seeing more stability in the real estate market. Nearly seven out of 10 believe that home values have stabilized in their area; the same number expects home sales to remain about the same through the end of the year.

While more than half (51 percent) say foreclosures are a problem in their area, the rate of foreclosures is also seen as stabilizing; 51 percent say the rate is about the same as last year. Thirty-six percent of respondents cite the recession, loss of jobs and the poor economy as the main reason for the ongoing foreclosure problem. This has also led to a slight increase in the number of people who believe the federal government should take a more active role overseeing loans and mortgages (44 percent, up from 43 percent last year).

While nearly seven out of 10 say it’s harder to sell a home in their area today than it was a year ago, it’s less of a concern from last year when the number was 10 percentage points higher. This is most likely the result of lower home inventories.

The 2010 National Housing Pulse Survey is conducted by American Strategies and Myers Research & Strategic Services for NAR’s Housing Opportunity Program. The telephone survey was among 1,209 adults living in the 25 most populous metropolitan statistical areas. The study has a margin of error of plus or minus 3.1 percentage points.

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Mortgages Hit Lowest Levels Since 1950s

Posted on October 9, 2010 by Green and Company

Get More Home For Your Dollar

Thirty-year fixed mortgages slipped to 4.27 percent this week, the lowest on records dating back to 1971, from 4.32 percent last week.

A drop in interest on 15-year loans to 3.72 percent from 3.75 percent, meanwhile, was the lowest on records dating back to 1991. Freddie Mac also reported that the five-year adjustable-rate mortgage fell to 3.47 percent from 3.52 percent last week, and the one-year ARM dropped to 3.40 percent this week from 3.48 percent.

Chicago Sun Times

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How To Improve Your Credit Score

Posted on October 8, 2010 by Green and Company

fix_your_credit_score

Upgrade Your Credit Score!

Many home buyers now and into the foreseeable future will face tight lending standards and the need to improve their credit score to get prequalified or preapproved for mortgages. Be aware of the following steps you can take for some speedy credit repair to gain lender approval and the best possible rates:

Credit Card Wisdom

- Paying revolving credit cards down is generally more beneficial than, for example, paying down student loans, mortgage or auto loans.
- Always leave a 30% or higher gap between what you owe on the card and the card’s limit. Lenders look for this minimum gap.
- Use cards with care even if you pay off balances each month because depending upon statement dates, the lender may see big balances.
- Pay down the cards closest to their limits first for speedier credit repair. The lending bank will then see the “gap” it wants to see.
- Do not ask a creditor to lower credit limits. Generally, carrying smaller balances on several cards is better than one large balance on one card.
- Check your credit card limits to make sure the report is correct. Limits may not be reported on all cards.
- Never make a late payment on credit cards or any loan.

Protesting Items

- Protest any unjust negatives, such as late payments, collections that are not yours, and any items not reported as “paid as agreed,” if you paid on time and in full.
- Protest items listed as unpaid that were included in a bankruptcy, and items older than seven years (10 for bankruptcy).
- Focus first on the larger, newer negatives listed on the report.

It is important not to worry about smaller items like incorrect address information or an old employer listed as current. This is, of course, unless there is the possibility of identity theft or the file is mixed with someone else’s.

This is certainly not an all-inclusive list of the steps that can be taken to improve a credit score, but it is a great start for clients needing to focus on their scores before attempting to get preapproved and purchase a home through you.

Chris Kaucnik is marketing director for Home Warranty of America

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Staging and Preparing a Home For Sale

Posted on October 7, 2010 by Green and Company

NH Home For Sale

Back in the boom times of the Real Estate market from the mid 1990′s until the mid 2000′s getting a home truly ready for the market was far less important than it is today. Every home seller today is in stiff competition with the next guy down the street with far less buyers in the market place.

This makes it far more critical for your home to be polished when the for sale sign gets placed on the lawn. In a buyers market those that are looking at your home are far less forgiving. It is easy for buyers to be choosy because there are so many more homes for them to look at. Homes that are not in good shape can take a severe price beating in this environment. Most buyers are looking for turnkey properties. Far fewer buyers are interested in spending the time and energy of fixing up a sellers headaches.

One of the things you hear talked about a lot in Real Estate circles is “curb appeal”. First impressions are an important factor when you are selling a home. Since the first thing a buyer looks at when they visit your property is the yard and the exterior of the house, you want to make sure that at the very least it is presentable.

Here are some tips for minimal money that will help to facilitate a more timely sale:

EXTERIOR HOME SALE TIPS

  • Clean up all debris from the winter months including any tree limbs, branches, and left over leaves.
  • Clean the driveway and walkway of any sand and other debris.
  • Pay careful attention to have all your landscaping beds raked and weeded out. Adding a fresh coat of mulch always goes a long way.
  • Trim the bushes if needed. Pay attention to keeping them a few feet back from the home allowing for proper ventilation.
  • Consider planting some hearty Spring flowers that have lots of color.
  • Assess your driveway and get it seal coated if it looks old and worn. Seal coating is fairly inexpensive and really does wonders to give your home a new and appealing feel.
  • Clean out your gutters. Leaves hanging out of gutters creates a feeling that the home is not well maintained.
  • Hose down your deck and consider sealing the surface if needed.
  • Look for any rotted trim and replace as needed.
  • The entry way to your home should sparkle! A fresh coat of paint on the front door always looks great. Make sure you remove any cob webs.
  • Consider adding a few potted plants at the entry with some vibrant flowers.
  • Use a garden hose and spray down any areas of your siding that may have mold or mildew build-up.

Before visiting some tips for sprucing up the interior of your home please keep in mind that a buyer almost ALWAYS estimates higher than the actual cost to make necessary repairs and or improvements. It will cost you far less money to do these things than letting the buyer deduct an appropriate credit in their mind.

Bill Gassett is a Realtor at RE/MAX Executive Realty located in Hopkinton, MA

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Applications to Purchase Homes Rose Last Week

Posted on September 29, 2010 by Green and Company

by Mortgage Bankers Association, September 29, 2010

Mortgage applications to purchase homes rose 2.4 percent last week, compared to the previous week, on a seasonally adjusted basis, according to the weekly report from the Mortgage Bankers Association.

The increase was driven by a 4.5 percent rise in applications for government-guaranteed mortgages, including FHA and VA loans. Conventional purchase applications increased 0.8 percent.

On an unadjusted basis, purchase applications rose 1.5 percent compared to the previous week and were down 32.4 percent compared to the same week a year ago.

Mortgage rates declined:

· 30-year fixed-rate mortgages decreased to 4.38 percent from 4.44 percent;
· 15-year fixed-rate mortgages decreased to 3.77 percent from 3.88 percent;
· 1-year ARMs increased to 7.04 percent from 6.96 percent.

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