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Posts Tagged foreclosures

4.5 Percent Interest Rates Provide Hopeful Outlook For Home Buyers

Dec 21

Posted by admin in Real Estate

There is a plan in the works to lower the rate on 30-year home mortgages to 4.5 percent, a number not seen in decades for home loans. The plan by the Treasury Department to help the hurting housing industry would be accomplished through purchasing mortgage-backed securities from Fannie Mae and Freddie Mac. For those with good credit and some money for a down payment, it is a great time to buy a house. The downside to this plan is that it does little to help those who are struggling to pay their existing mortgage. While Federal Reserve chairman Ben Bernanke gave new warnings last week about how the growing number of foreclosures is adversely affecting the economy, there seems to be little agreement on how to help.

The Treasury Department plan could only be available to people buying houses, not to those who want to refinance. Thus someone moving in next door could pay considerably less in mortgage payments each month than the person who has owned his house and struggled to keep up the payments at a higher interest rate. It doesn’t seem fair and it only addresses half of the housing market problems. According to the Associated Press, the man in charge of the $700 billion bailout, Neel Kashkari, told a congressional panel last Thursday that the user was reviewing the 4.5 percent mortgage plan. What remains unclear at this point is if the Treasury Department’s proposal would end up applying only to new mortgages or to refinanced loans, as well.

Some economist seemed to believe that a government lending plan that applies only to new loans would not do enough to help the overall economy. But those in the home building, real estate and other related home industries seemed to welcome the proposal. Lawrence Yun, chief economist at the National Association of Realtors, said by spurring new buyers the housing market and the economy would be stabilized. If the Treasury Department does end up using some of the bailout funds to offer help to current mortgage owners, it may or may not be a good idea to refinance. According to Bankrate, good reasons to refinance include getting a lower interest rate, shortening the term of the mortgage to build equity faster, lowering monthly payments or switching from an adjustable rate to a fixed-rate mortgage.  However, homeowners need to consider the cost of refinancing before rushing to the bank. Since getting a new loan can cost around 2-3 percent of the total loan amount, it is important to weigh the cost against the benefits. For instance, if a homeowner plans to be in the house for years to come, refinancing is probably a good idea. But if the outlook for owning a home is less than 3 years, refinancing may not be worth it.

And then of course, there are those really hurting who owe more than their house is worth. This is where the bailout gets very tricky. It seems the logistics of helping those truly facing foreclosure is difficult at best and a losing proposition for lenders at worst. While there are no easy solutions to the current financial crises, at least there are some silver linings. The hope is that a spree of new home buying could help the housing market and eventually stabilize home prices.

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New Home Sales: A Stunning Slide

Nov 15

Posted by admin in Real Estate

Sales plunged last month to their lowest level in more than 12 years, a grim testament to the problems plaguing the housing sector.

A Commerce Dept. report released on Dec. 28 showed U.S. new-home sales plunged 9%, to a 0.647 million unit annual rate in November, from a downwardly revised 0.711 million in October (from 0.728 million previously). Market forecasters had expected a more modest decline to 0.715 million. Following downwardly revised numbers for August and September, new-home sales are stuck in a steep downtrend.

New-home sales dropped by 19.3% in the Northeast, 27.6% in the Midwest, and 6.4% in the South. However, sales increased by 4% in the West. Over the last 12 months, new-home sales nationwide have tumbled by 34.4%, the biggest annual slide since early 1991, and stark evidence of the painful collapse of the once high-flying housing market.

The supply of homes for sale rose to 9.3 months’ worth from 8.8 (revised from 8.5). Whereas earlier sales and price data had suggested big price cuts by homebuilders were clearing inventory, this pattern has been reversed with the November data and revisions.
Stocks Retreat From Earlier Highs
The median price figures were surprisingly firm, according to Action Economics, rising to $239,100, vs. an upwardly revised $229,500 in October (previously $217,800). Prices are down 0.4% over last year, however. Bear Stearns economist John Ryding called the report “miserably weak.” “[The report] shows, once again, it is too soon to talk about stabilization in housing activity,” he wrote in a Dec. 28 note.

Treasury yields sprinted lower on Dec. 28 following news of the plunge in new-home sales. Stocks retreated from earlier highs, while the U.S. dollar edged lower vs. other major currencies. Fed funds futures prices climbed on the back of the worse-than-expected new-home sales data. Traders have priced in an 84% chance for a 25-basis-point rate cut by the Federal Reserve in January, which would put the Fed funds rate target at 4%.
Problems Likely to Persist
The housing market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. Sales turned weak as did prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.

Foreclosures have soared to record highs and probably will keep rising. A drop in home prices left some people stuck with balances on their mortgages that eclipsed the worth of their home. Other homebuyers were clobbered as low introductory rates on their mortgages jumped to much higher rates that they couldn’t afford.

With credit now harder to get to finance a home purchase, the problems in housing have grown worse. Unsold homes have piled up, and the problems are expected to persist well into next year.

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Tips For Getting A Low Downpayment

Oct 4

Posted by admin in Real Estate

There\’s also a lot of personal satisfaction in living in a home that you own. Real estate is still considered a valued investment which can have many financial advantages and tax benefits. The amount of interest you pay on a home loan and the real estate taxes you pay on your home are among the few major federal tax deductions. Owning a home is the primary way most people build wealth.

Despite the many benefits of owning a home, there are still countless people for whom this goal remains slightly out of reach. For more and more families, saving the money for a down payment is the biggest obstacle to homeownership. Many people mistakenly believe that you have to come up with a down payment equal to 20 percent of the price of a home.

Traditionally, lenders have required that home buyers be able to make a down payment of at least 20% of a home\’s purchase price to get a home loan or mortgage. However, mortgage lenders will grant home loans to qualifying home buyers with a down payment of as little as 3 to 5 percent of the purchase price, if the mortgage is insured.

In fact, home loans with down payments of less than 20% are increasingly popular. They are called \”low down payment mortgages.\” HUD homes are usually available with low down payments and attractive financing. This is good news for the millions of home buyers who are finding it difficult to save a large down payment, especially for their first house.

There are few ways to make a low down payment possible. Simply put, mortgage insurance protects the mortgage lender against financial loss if a homeowner stops making mortgage payments. Lenders usually require insurance on low down payment loans for protection in the event that the homeowner fails to make his or her payments.

When a homeowner does not make mortgage payments, a default occurs and the home goes into foreclosure. Both the homeowner and the mortgage insurer lose in a foreclosure. The homeowner loses the house and all of the money put into it. The mortgage insurer will then have to pay the lender\’s claim on the defaulted loan.

For this reason, it is crucial that the family buying the home can really afford it — not only when they buy, but throughout the time period of the loan. Although the cost of the mortgage insurance is paid by the home buyer, or borrower, the mortgage insurer works directly with the lender. Mortgage insurance is available to commercial banks, mortgage bankers, and savings

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Listings of Bank Foreclosures from Failed Small Banks

Apr 29

Posted by admin in Real Estate

Listings of bank foreclosures continue to grow as the number of collapsing small banks continue to rise. According to the Federal Deposit Insurance Corporation, it has just shuttered the 100th failed bank in the last year. While the country’s largest banks were rescued by billions in taxpayer money, failing small banks were closed and their deposits and other assets were transferred to other banks.

According to bank analysts, the number of failed small banks is still considerably low compared to the overall number of smaller banks throughout the U.S., but the bank closures show the divide between smaller banks and the country’s biggest banks like U.S. Bancorp, JPMorgan Chase and Goldman Sachs, which are growing stronger and bigger. Analysts cite the high number of bad real property loans as the major factor for the failure of most, if not all, of the 100 banks that have failed so far this year. They expect more small banks to fail and to release more listings of banks foreclosures into the market because of these toxic real estate loans.

The rising number of bank failures has wiped out billions from the FDIC, which has been paying the depositors of failed banks. FDIC said that its over $50-billion fund as of 2007 is now below the safe level. To replenish its fund, it has asked stronger banks to make their insurance payments earlier.

Communities served by small banks are also now feeling the adverse effects of the failure of their banks. Although their deposits are paid by FDIC and their other assets are transferred to the acquiring institutions, they have lost their strong relationships with their bankers and they are now facing new bankers bent on cutting costs and eliminating previous incentives. Some acquiring banks have closed branches, terminated high-interest deposit accounts, cut off several lines of credit and ended loan programs with favorable terms.

FDIC Chairwoman Sheila Bair explained that bank closures are painful to communities, but failing banks needed to be shuttered early so assets can be preserved, consumers can be protected and financial stability is sustained.

The FDIC expects more bank failures over the coming years, particularly in the Southeast and Midwest where banks made big loans to house builders and developers of strip malls, housing subdivisions and office buildings.

According to Foresight Analytics, around $870 billion of the $1.8 trillion worth of commercial property loans in the U.S. were provided by smaller banks that lack the trading strength of bigger banks, putting them closer to failure and their assets to listings of bank foreclosures.

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Buying A Home – Does Your Realtor Offer You These 7 Things?

Apr 8

Posted by admin in Credit, Real Estate

Shopping for a house can be a complicated process and necessitates the use of a seasoned agent to aid you in understanding what you need to accomplish. He or she must present your buyer interests in matters such as ironing out the deal with the seller, lining up the most suited home loan, completing all forms, and clearing the home inspection so it doesn’t disclose any outstanding problems.

An effective agent acts as your squad leader, first and foremost, he or she takes care of your best matters to while aligning other players and jobs. Your Realtor should:

1) Advise On A Neighbourhood – Your agent should be intimate with the area to propose feasible neighborhoods that fit your desires. Optimally he or she should domicile in or close to the city you are considering and be competent enough to give you an expert viewpoint of the residential area you’re interested in.

2) Facilitates You In Judging Market Value – A proficient agent will put put together a competitive market analysis (CMA) to forecast the value of the home you’re contemplating. The CMA is comprised of data gathered from corresponding homes that have sold in the most recent six months.

3) Discovers A House Suitable For Your Requirements – An effective Realtor will search for properties that meets your standards and arranges to show them to you when they become purchasable. Any honourable real estate agent acknowledges this undertaking can consume up to a year and won’t press you into purchasing a home that won’t accommodate your requirements.

4) Walks Through Properties With You – Your agent should take you around personally to look at homes. Their experienced eyes can possibly help you determine if a house suits your needs and if there are potential problems such as a leaky roof or old plumbing.

5) Drafts The Offer And Irons Outs The Deal – Your Realtor will assist you in drafting an offer that contains your offer price and conditions. In addition, he or she will talk over all lawfully mandated disclosures concerning your potential home.

6) Prepares You For The Entire Procedure – When you’ve picked out which Realtor to use, he or she needs to be able-bodied enough to discuss the sequence of events required to find your property, including composing the offer, applying for funding, opening up escrow with a respectable office, finding out if title is clear, acquiring an insurance policy, getting rid of contingencies, and finalizing the transaction.

7) Organizes The Entire Procedure – Once your offer is accepted, your real estate agent will assist you through the steps expected to nail down the transaction. He or she will book property inspections, line up funding and obtain the necessary insurance policies. Nearly of these jobs will be addressed by your real estate agent or assigned to the suitable professional person. A professional real estate agent will be in attendance for significant events such as the appraisal, inspections, the last walk-through, and the conclusion of escrow. He or she will also represent your homebuying concerns in areas like talking terms with the seller, determining the most acceptable loan deal, filling out required paperwork, and establishing the home inspection discloses no significant flaws.

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Tips For Buying Foreclosures In Louisville, Kentucky

Mar 26

Posted by admin in Credit

With the current state of the Real Estate market, a lot of people are looking for tips for buying foreclosures. And they’re right, this is a nice time to be looking at buying Real Estate, either for you own personal use or as investment property. However, there are some things you need to keep in mind when negotiating to buy REO properties so we thought we would put together some tips for buying foreclosures for you.

First of all you must always remember when looking at foreclosures that the house may not have been lived in for quite a few months. If nobody has been looking after the property you may have some surprises in store on that initial visit. Keep an open mind but know that you may have to deal with an exterminator to get rid of rodents or insects. If the utilities have been off for several months you’ll want to have the plumbing checked to make sure there were no frozen pipes during the winter time that may have burst. And you’ll want to test the furnace, air conditioning and water heater to make certain they are in good working order.

You’re not the only buyer who’s interesting in buying foreclosures and the bank may receive dozens of offers for the property you’re interested in. Sometimes the lenders take all of the bids into consideration and sometimes they toss all but the two highest offers and then ask each of you to make a “Highest and Final” bid. Either way, with a little research you can make sure yours is the winning bid.

Ask your Real Estate agent to find out the lender’s purchase price or you can get this yourself from the tax rolls or a title company. Compare the original mortgage balance and also the foreclosure sale price and somewhere in between is the amount the bank will accept. You also need to look at figures for comparable sales in the area over the past 3 months. The market value of the house and the asking price are 2 completely different things.

You’ll know you can afford to raise your offer a little and still be paying less than the house is actually worth if the bank is asking a very low price as compared to the market value of similar homes within the area.

Get a pre-approval letter from your lender AND the bank or lender who holds the mortgage. You’ll be able to use your own lender when you close, however banks don’t trust approval letters from other banks. So if you’ve got also gone the additional step and can provide a pre-approval letter from the bank who actually holds the mortgage, too, you will look that much better.

Get to know various home inspectors and let them know you’re looking at purchasing a foreclosure property and ask them to be available. If someone else asks for 14 days to allow time for inspections and you ask for just 5 then you’ll really look good to that lender. One of the best tips for buying foreclosures is just to remember that the bank wants out from under that property as fast as possible. The easier you make it for them to award you the property the easier it will be for you to move into that new home.

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Buying A Home – 5 Tips On Finding A Home To Fit Your Lifestyle

Mar 13

Posted by admin in Credit, Real Estate

Buying a home involves finding one that suits your particular lifestyle. it’s so easy to focus on your present circumstances, but it’s important to also consider what you expect life will be like in a few years from now. Let’s discuss the 5 home features that can affect your lifestyle:

1) What’s your Dream Lifestyle? – Does the nightclub scene suite your taste? If so, you probably want a home close to the hot spots of town where you can walk home. if you’re a business traveler, you may want to consider a town home or condo in close proximity to the airport.

2) Size Of Household – If you expect your household size to grow by adding roommates, kids, or parents, you’ll want
to consider buying a home with adequate bedrooms, bathrooms, backyard space, and a good school district. If you plan to remain single, a smaller home may be adequate.

3) Functional Layout – What daily activities will you be conducting in your home? It’s important to select a home
that allows room for your hobbies, home office, parties, or gourmet cooking. It wouldn’t make sense to choose a home with a small kitchen if you frequently entertain friends and family.

4) Home Activities – Your choice of home should match the daily activities you plan to conduct at home. Do you like to construct large indoor crafts or woodworking projects? You’ll probably want a home with ample garage space for these projects. Are you an aspiring chef? Then a home with a large kitchen and pantry would suit your needs.

5) Is This A Starter Home? – If your budget is tight and you’re barely able to qualify for a compact home, a good
idea would be to buy a minor fixer upper in a good area. By spending a little time doing minor cosmetic remodeling, you could make the very appealing and list it for greater
profit. With the extra profit earned from the sale, you can use it as a down payment on a larger home. or even a
duplex.

By addressing these 5 lifestyle facts, you’ll be able to select the best property to suit your future needs. A great exercise would be to imagine where you’d like to be in the
next 5 years. Practice this with a friend or partner and let your imagination run free without being unrealistic. You may be surprised to discover additional lifestyle goals that will define what type of home you want.

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