Buying Short Sales or Foreclosures

                              

Short sales

For a distressed property, you could be dealing with third parties, each with their own agenda and process rules.

On short sales, banks will price a home close to the market value, but they are often willing to take less to avoid a costly foreclosure. The average short sale in the past year has sold at14 percent off the list price, compared with a 7 percent discount for foreclosure and regular sales.

Dealing for a foreclosure

Because banks are eager to unload properties they own, they list the home at a price at which they think it will sell quickly. These properties are often bought for cash by investors. In California, 31 percent of recent deals were by cash, according to Money magazine.

In some cases, the bank that handles the foreclosure may not own the loan. During the real estate boom years, many loans were sold off to other investors. In that case, the bank who owns the property has to consider the amount investors who own the loan are willing to accept.

Wells Fargo short sale and foreclosure servicing department says, on loans insured by the Federal Housing Administration, lenders can accept no less than 88 percent of appraised fair market value in the first 30 days. That declines to 84 percent after 60 days.

How to make an offer

Have an excellent real estate agent and follow their advice.

Apartments are Getting Scarce and Rents are Rising

                   

It’s no secret that many underwater homeowners are losing their homes. At that point, they are renting apartments.

How big is the demand? In the 1980s, about 28 million people in the United States were living in rented apartments. By the 2010s, that number had risen to about 42 million.

It’s good news for apartment owners, who are seeing the values of their properties rise. Apartment values are also rising because the market is healthy, which makes financing cheaper.

It isn’t good news for renters. Rents are rising and vacancies are falling in some areas. For example, studio apartment rents in Chicago are increasing from an average of $720 to $765 a month.

Mainly because of foreclosures, the nation’s home-ownership rate fell by 2 percent between 2004 and 2010, according to the Census Bureau. Each 1 percent represents one million households moving into rentals.

Understanding Your Credit Score

                                          
Your credit score is one of the biggest determining factors in your ability to get a quality loan, and it is far more complex than just a three-digit number.
Yahoo! Personal Finance recently wrote an in-depth piece about understanding the intricacies of your credit score and what it means.

According to the article, “consumer research conducted by the Consumer Federation of America and VantageScore Solutions shows that many Americans don’t really understand their credit scores.”

The lower your credit score, the higher interest you will pay on loans and any line of credit. Understanding the basics of credit scores can help you achieve your goals, including home ownership.

Click here to view the article and learn more about credit scores.

Types of Hardwoods

There are a number of choices to be made when you are replacing existing flooring with hardwood.

Prefinished hardwood requires less installation time and effort.

Unfinished floors can be sanded and stained to the color you want, now and later.

Engineered hardwood has thinner pieces of wood layered on top of each other. For those concerned with high humidity, engineered hardwoods expand and contract very little as opposed to solid hardwoods.

Whatever the type, hardwood flooring can make a drastic difference in the overall look of a room.



This Week’s Market Commentary

                      

This week brings us the release of seven relevant economic reports for the bond market to digest. We are also heading into corporate earnings season, which could lead to fluctuations in the stock markets.

If earnings come in lighter than estimates, the stock markets may fall, leading to an influx of funds into bonds. But if earnings and forecasts are strong, the major stock indexes may rally, pulling funds from bonds and leading to higher mortgage rates.

There is no relevant economic news scheduled for release tomorrow. The first report of the week comes Tuesday morning but it is the least important one. February’s Goods and Service Trade Balance will be posted early Tuesday morning. This data gives us the size of the U.S. trade deficit, but unless it varies greatly from forecasts, it likely will not cause much movement in mortgage rates. Current forecasts show a $45.7 billion trade deficit.

The first important report will be posted early Wednesday morning when the Commerce Department will release March’s Retail Sales data. This piece of data gives us a measurement of consumer spending, which is very important because consumer spending makes up two-thirds of the U.S. economy. Forecasts are calling for a 0.5% increase in sales last month. If we see a larger increase in spending, the bond market will likely fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower Wednesday.

The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET Wednesday. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Generally speaking, signs of strong economic growth or inflation rising would be considered negative for bonds and mortgage rates. Slowing economic conditions with little sign of inflationary pressures would be considered favorable for bonds and mortgage pricing.

The two Treasury auctions are scheduled for Wednesday and Thursday. There is a 10-year Treasury Note sale Wednesday and a 30-year Bond sale Thursday. We could see some weakness in bonds ahead of the sales as investing firms sell current holdings to prepare for them. This weakness is usually only temporary if the sales are met with a decent demand. The results of the auctions will be posted at 1:00 PM ET each day. If the demand from investors was strong, the bond market could rally during afternoon trading, leading to lower mortgage rates. If the sales were met with a poor demand, the afternoon weakness may cause upward revisions to mortgage pricing Wednesday and/or Thursday afternoon.

Thursday’s important data comes when the Labor Department will post March’s Producer Price Index (PPI) at 8:30 AM ET. It will give us an important measurement of inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. If it shows rapidly rising prices, inflation fears may hurt bond prices since it erodes the value of a bond’s future fixed interest payments, leading to higher mortgage rates. A slight increase, or better yet a decline in prices, would be good news for the bond market and mortgage rates. Current forecasts are calling for a 1.0% increase in the overall reading and a 0.2% rise in the core data.

The remaining three economic reports will all be posted Friday morning. This first will be March’s Consumer Price Index (CPI). This index is one of the most important pieces of data we see each month. It is similar to Thursday’s PPI but measures inflationary pressures at the consumer level of the economy. If inflation is rapidly rising, bonds become less appealing to investors, leading to bond selling and higher mortgage rates. As with the PPI, there are two readings in the index that traders watch. Analysts are expecting to see a 0.5% increase in the overall readings and a 0.2% rise in the core reading. If we see larger increases, we could get higher mortgage rates Friday.

March’s Industrial Production data will be posted at 9:15 AM ET Friday. It gives us a measurement of output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for an increase in production of 0.6%. This data is considered to be only moderately important to rates, so it will take more than just a slight variance to influence bond trading and mortgage pricing.

The final release of the week is the University of Michigan’s Index of Consumer Sentiment at 9:55 AM ET Friday. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers’ willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a sizable decline from March’s 67.5 reading. Current forecasts are calling for a reading of approximately 66.0.
Overall, look for the most movement in rates the middle part of the week. The Retail Sales and CPI reports are the biggest names on the agenda. Either of them can cause significant movement in the markets and mortgage rates, so either Wednesday or Friday will probably be the most active day of the week. Look for the stock markets to influence bond trading and mortgage rates the first part of the week, but we can expect to see the most movement in rates the latter part.

Time to Buy a New Home?

                        

Today, you can get all of what you need and most of what you want.
When it comes to fine kitchens, more bedrooms, storage space, and great features, your chance of getting them all is better than in many previous years. How about a deck and a sunroom?
The recent Housing Affordability Index by the National Association of Realtors is 173.8, or about 40 points lower than in 2008.

How to Qualify
 The average price for a single-family home in the index is $170,300. To qualify for that purchase at an interest rate of 5.09 percent, buyers would only need a family income of $34,512.

Another interesting way to look at affordability was shown recently in The Wall Street Journal. The Journal reported that the cost of a home now is equivalent to about 19 months of total income for an average family. Previously, home prices averaged about 24 months of an individual or family income. That means more buyers can afford a home right now.

While the affordability numbers are a good indication, the number of available homes is also a plus. Home buyers can find many in their price range to choose from. Why should they pay high rents when they could be accumulating equity?

What Mortgage Brokers Say

Home ownership is a smart choice when you have reached a stable situation in your life. According to mortgage brokers, that means you have decided on a life path and are taking steps to achieve it, and your income is secure.
When you aren’t moving to another city in the next several years, and you have savings for a down payment, you are ready to move forward with your housing plans.

An idealized vision of how life should be will help you choose a home, but the mortgage brokers say the basic facts to justify The American Dream should be in place.

To Own or To Rent?

               

Purchasing a home requires a thoughtful decision. For some, leaving a rented apartment is difficult due to its financial flexibility; however choosing homeownership can be financially rewarding.

Here are some things to keep in mind when considering buying a home:

Don’t Wait Until It’s Too LateBuyers sitting on the fence while waiting for the “prices to go down” will miss out on long-term appreciation gains and possible tax advantages.

A Smart InvestmentRenting does not provide equity benefits. Make your money work for you by building equity in your own home and benefiting from possible tax advantages* as a homeowner.

Good News!

High InventoryThere is currently a greater selection of homes for sale on the market. Sellers are motivated and many homes are priced to move! That means you have a better chance of finding the home that best fits your lifestyle and needs.

Motivated SellersBecause the market is moving more slowly, some sellers may be highly motivated to participate in special financing programs such as buying down the interest rate on your loan. This makes homeownership much more affordable than you think.

Finding the Right Loan For YouA loan consultant can provide you with a wide selection of mortgage options that have payment structures to best suit your individual needs. As a full service mortgage banker and broker, Princeton Capital can offer many loan options along with competitive pricing. They have greater control in the decision making process from start to finish, so your loan can close faster with more flexible terms.