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.

Credit Score Resources

                                  


Do you know your FICO credit score? If you are looking to purchase a home, be sure to look into your credit score well in advance.

Today’s market is competitive, with more cash buyers investing in property and multiple-offer transactions. Are you in the 700 range? 600 range? You will need some time to find out your score and work on improving it if need be. Check out the below sources to help you assess your credit situation.

Four Good Sources of Credit Information
Here are four websites worth visiting, if you want to learn more about your credit reports and scores:

1.    www.myfico.com — This site is owned by the company that created the credit-scoring model used by most lenders. The education tab is especially useful. Take a look at the forum where you can post questions.

2.     www.annualcreditreport.com — This website is jointly owned by the three credit-reporting companies (TransUnion, Equifax and Experian). This is where you should go to request your free reports. This is the only site that is regulated by the Federal Trade Commission.

3.     www.ftc.gov/freereports — This website is useful to find out why a “free” credit report is offered, but then they try to “charge” you for additional things. This is a marketing practice in wide use and this website can tell you more about it.

4.     www.bankrate.com — This site offers credit tips and it explains the mortgage process. You can compare rates, use a myriad of calculators and check out their “news and advise” tab for pertinent news information each week.

The four sites listed above will help you get started on your home buying adventure.

This Week’s Market Commentary

                                  

                                                      Ben Bernanke

This week brings us the release of six economic reports to be concerned with in addition to some very important testimony from Fed Chairman Bernanke. Two of the reports are considered to be very important, but nearly all of the week’s releases have the potential to affect mortgage rates.


The week’s first data comes this morning with the release of January’s Personal Income ad Outlays data, which gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.3% while spending is expected to rise 0.4.
Since consumer spending makes up two-thirds of the U.S. economy, the bond market does better when spending is slowing. Good news would be a smaller than expected increase, or better yet, a decline in spending.


The Institute for Supply Management (ISM) will release their manufacturing index for February late Tuesday morning. This index measures manufacturer sentiment and can have a pretty large impact on the financial and mortgage markets if it varies from forecasts. It is expected to show a decline from January’s 60.8 to 60.5 this month. This is important because a reading above 50.0 means more surveyed manufacturers felt business improved during the month than those who felt it had worsened, meaning likely growth in the manufacturing sector. If we see a weaker than expected reading, the bond market could rally.


Fed Chairman Bernanke will deliver the Fed’s semi-annual testimony on the status of the economy late Tuesday and Wednesday mornings. He will be speaking to the Senate Banking Committee Tuesday and the House Financial Services Committee Wednesday.


The Fed Beige Book is the next report scheduled for release and it will be posted Wednesday afternoon. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading Wednesday. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.
The biggest news of the week comes Friday morning when one of the single most important monthly reports we see will be posted. The Labor Department will release February’s Employment report at 8:30 AM ET Friday. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading.
The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a large drop in payrolls and little or no increase in earnings. Current forecasts are calling for 0.1% increase in the unemployment rate to 9.1% and approximately 180,000 jobs added during the month. Weaker than expected readings would be great news for the bond market and should lead to lower mortgage rates Friday.


January’s Factory Orders will be posted late Friday morning, which will give us another measurement of manufacturing sector strength. This data is similar to last week’s Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for an increase in new orders of approximately 2.1%. A smaller than expected rise would be good news for the bond market and could lead to an improvement in mortgage rates.


Overall, look for a fairly active week for mortgage rates. Friday is undoubtedly the biggest day of the week, but Tuesday may also bring noticeable movement in mortgage rates.

Mortgage Delinquencies Declining

                                            

                                                 Graph via the Wall Street Journal

According to a recent Wall Street Journal article, there has been a decline in mortgage delinquencies as a result of an improving labor market.

The job market effects the mortgage market intensely, because, as the article points out, “people need a paycheck to pay their mortgage.”

During the fourth quarter, the number of people behind on mortgage payments fell to its lowest point in two years.

An important takeaway from this article: “The figures provide the clearest indication yet that the mortgage crisis that began four years ago has stopped getting worse and is easing.”

Another thing to note is that the state of California is doing extremely well compared to others, with the state’s total foreclosure inventory in the fourth quarter below the national average for the first time since the mortgage crisis began.

An economist said that without a spike in unemployment, the mortgage delinquency rate should continue to decline; a great sign for economic recovery.

Loan Pre-Approval and Turning Yourself Into a “Cash Buyer”

                       

Being pre-approved for a loan puts you in a great position when buying a home. It puts you on equal footing with an all-cash buyer, in essence turning yourself into a cash buyer.

With a real pre-approval, the buyer is the next-best-thing to being a “cash buyer” because the seller can rest assured that the buyer will qualify for a loan.

A truly “all-cash buyer” does not have to worry about lender approvals, but will typically still be concerned with a property appraisal and an acceptable title report.

Being pre-approved for a loan puts a buyer in a better position with the seller of the property. It allows the buyer to understand the costs associated with the purchase as well as the monthly costs associated with the ongoing ownership.

The Pre-Approval Process
The pre-approval process simply means that a buyer is getting approved for a loan prior to reaching an agreement with a seller of a property. The buyer will provide the lender with current income, asset and credit documents and the lender will determine the loan amount for which the buyer will be able to borrower.

The pre-approval process can take anywhere from 2 – 30 days, depending on the variables surrounding the possible transaction (credit worthiness, location of assets, calculation of income, etc).

Once a loan amount and purchase price have been determined by the lender, the final approval will usually be subject to an acceptable purchase contract, property appraisal, title report and final interest rates.

While it will vary from borrower to borrower based in the individual characteristics, a lender will typically be able to pre-approve a buyer within 5 days of receiving all of the applicable income, asset and credit documents.

The Best Time in History to Buy a House

By Dr. Steve Sjuggerud Friday, January 28, 2011

Right now, is the best time in history to buy a house in America.

 

Today, I'll show you why… based on a few cold, hard facts.

 

First off, mortgage rates are lower than they've ever been in American history…

 

Most investors have only seen a couple decades of mortgages rates on a chart. But my friends at Global Financial Data have databases – including real estate data – that literally go back centuries.

 

I had dinner with the Global Financial Data team over the weekend. And they told me about their "Winans International" real estate indexes, with housing prices back to the 1800s and mortgage rates going back over a century. I had to share it with you…

 

Take a look at this chart of mortgage interest rates since 1900:

 

 

As you can see, current mortgage rates are the lowest in U.S. history.

 

When were mortgage rates even close to this low in the past? Just after World War II…

 

And what happened, just after World War II, when mortgage rates were this low? The greatest postwar boom in housing prices – by far.

 

 

Take a look. Mortgage rates bottomed in the mid-1950s, and house prices bottomed about the same time. Then the greatest boom in home prices in our lifetimes started.

 

Today we have record-low mortgage rates. And we have another thing in our favor…

 

Homes are more affordable than ever.

 

Based on the 40-year history of the Housing Affordability Index… houses are more affordable than they've ever been. Take a look…

 

 

"Affordability" takes three factors into account: home prices, your income, and mortgage rates.

 

Home prices have crashed. And mortgage rates are at record lows. But incomes (nationwide) haven't fallen nearly as much… So homes are now more affordable than ever.

 

"Most people" out there will only tell you the bad news about housing… That's the way it goes in a bear market. People drive looking in the rearview mirror.

 

Meanwhile, we have some darn compelling facts out there…

 

Home prices have fallen by a third… and mortgage rates are the lowest in history. Therefore, U.S. homes are more affordable than they've ever been.

 

You can listen to "most people." Or you can choose to ignore them and stick to these facts.

 

Based on these facts alone, now may be one of the best times in American history – even the very best time – to buy a house.

 

Good investing,

Steve

P.S. If you need long-term data like I showed in the charts above, talk to my friends at Global Financial Data. You can find them at http://www.globalfinancialdata.com/.

 

Article Link: http://www.dailywealth.com/1615/The-Best-Time-in-History-to-Buy-a-House

Real Estate Agent Safety: Marketing and Personal Information

Don't set yourself up to be victimized because of excess personal information in your marketing.

Flashy personal marketing can be a great tool, but beware of the information you include in these materials. Some predators target real estate agents, especially females, they find through the agent’s marketing.
THE RISK: Marketing materials that contain photos of yourself may attract the attention of criminals. Police have found criminals circling real estate professionals’ photos in newspapers and marketing materials (Read one agent’s account of this.)

                                                    SAFETY  TIPS

• Avoid provocative photos in your marketing. Low-cut blouses, full-body photos, and looking over your shoulder in a sexy pose can send the wrong message to criminals. “Why do you have to have photos anyway? What are you selling?” asks one Realtor, who advises against ever using a photo for business reasons; she uses a caricature.

“You make a living meeting complete strangers in empty houses. They see your photo and if you’re exactly what they’re looking for — whether that be an older or younger agent, blonde hair, blue eyes, whatever — they know all it takes is one phone call to meet you in a house. A picture can be dangerous.”

• Watch what you wear. Only wear shoes that you can run in. Avoid short skirts, low-cut tops, and expensive jewelry. “Predators don’t have the same boundaries as you do. They look at you like that and say ‘She’s asking for it,’” according to a personal safety expert.

• Protect your personal information. Use your cell phone number and office address in your marketing so it can’t be tracked back to your home address. Never use your home address or home phone number. Also, don’t reveal to your client personal information about your children, where you live, and who you live with — you can still build a relationship with clients without revealing all of your personal information, recommends the Washington Real Estate Safety Council.

Ways to Reduce Stress When You’re Moving

                             

             Savor time taking care of yourself to reduce the stress of moving.

Buying and selling a home and moving is one of the most stressful processes on the human psyche. It is important that while going through the real estate process, you find time to take care of yourself.

Just like on an airplane, you have to put an oxygen mask on yourself before helping anyone else. This means that in order to be able to take care of things and other people, it is important that you make sure you take care of yourself first.

Try setting aside relaxation time just for yourself each day, and do something you enjoy, despite the hectic and stressful nature of moving.

Reading a good book, spending time outside, taking a long bath, getting a massage – things like this will help you reduce your stress level immensely. With less real estate stress, handling the details will be easier.

Real Estate Agent Safety: Touring Properties with Strangers

January 26, 2011

For the third installment of the real estate agent safety series, today’s focus is

focus is on showing properties alone. This is standard practice for Realtors, but things can go very, very wrong. It is important to remember that safety precautions could one day save your life.

Showing a property alone

THE RISK: You’re touring vacant properties with strangers.
SAFETY TIPS:

• Use the buddy system.
There’s always strength in numbers. Whether you bring a coworker, spouse, or even your German shepherd, avoid going alone.

• Don’t go into confined places.
Avoid basements and attics — it’s too easy to become trapped. Instead, know the selling points of these rooms and remain in the foyer on the first floor with the front door open as the buyer tours these areas, an agent suggests. If you must join them in each room, always stay by the door, leaving doors open so you can flee more easily if necessary, the Washington Real Estate Safety Council suggests.

• Walk behind.
Let potential buyers take the lead when exploring a home, with you always following behind.

• Let others know where you are.
Tell them where you are going, when you will be back, and who you’re with. Better yet: Share this information while the client is with you so they know someone else knows where you are.

• Have an excuse.
If you feel uncomfortable, tell the person your “cell phone or beeper went off and I have to call the office” or “another agent with buyers is on his way,” suggests the Washington Real Estate Safety Council in their tip sheets. Read agents’ personal stories of getting out of a situation like this.

Quick Fixes for a Great Looking Kitchen

A modern look is very popular right now.

Cabinetry

Damaged or dirty cabinet doors are a big turn-off for buyers. But that’s easy to fix. Most cabinetry can be re-painted after cleaning it and applying a coat of primer. Just check that the materials can take paint or whether you need to give any special preparation to the doors first. Alternatively, you can just replace the doors. There are companies that provide doors to fit existing kitchen cabinets.

Hardware
Another way to fix up cabinets is to replace the hardware, perhaps changing out-of-date fixtures for sleek, modern ones. This is a very cheap and easy way to update your kitchen.

Sinks and faucets
Try trading your faucets for more modern designs and replacing a damaged or very dirty sink.

Appliances
People love modern stainless steel appliances. It could be a good investment to upgrade your appliances to the most modern designs to give your kitchen the ‘wow’ factor.

Backsplash
An easy way to update your kitchen is to replace the backsplash. Subway ormosaic tiles or a sheet of stainless steel are very popular right now, and this quick change can really lift the feel of the room.

Make sure the flooring matches the rest of the kitchen.

Flooring
Dirty, tired linoleum floors will turn off buyers. Try updating with tough laminate flooring or some tiles that tie into the rest of the kitchen.

Paint
Change the decor easily by repainting in fresh, modern, neutral colors. A coat of paint can be a very cheap way to refresh the look of your kitchen.

Clutter
Just by simply removing the clutter that accumulates on your countertops, you can freshen up your kitchen. Throw out things you don’t need; put away others you only use occasionally.

Top California Housing Finance Agency Questions Answered

The California Housing Finance Agency, or CalHFA, is a great resource for first-time home buyers in the state. Owning your first home is a dream that this program can help you achieve.

Who qualifies for CalHFA?
All first-time home buyers in the state qualify to receive this loan.

Is it true that you can receive a 3.75% Fixed Rate 30 year loan?
Yes, if you combine your CalHFA with a second loan from CHDAP - California Homebuyer’s Downpayment Assistance Program.

What is the minimum down payment with the 2nd loan from CHDAP?
The down payment can be as low as 1%.

Are seller contributions allowed?
Yes, they are allowed up to 3% of the purchase price of the home.

Mortgage California is an accredited lender of CalHFA, and we are here to help with any questions about this loan program.