Naples Florida Mortgage

These Times Won't Last Forever.......If Not NOW ~ WHEN?????

noreply@blogger.com (Suzy Keir) — Thu, 16 Feb 2012 18:52:00 +0000

Thinking of buying a home? Don't take too long. There is no question this is still a buyers' market, but you'll find with a wave of investors in search of good deals, the bargain homes are selling at a much quicker pace. The low prices and low mortgage rates won't disappear overnight, but they won't last forever.

"This is one of those times that, 10 years from now, people are going to look back and say, 'If I only had made the decision,'" says Shaun White, a vice president for the RE/MAX real estate network.

And for those who have been waiting to refinance their mortgages but couldn't because their home values have tumbled, your chance to take advantage of historically low rates should be here soon -- if all goes as planned.

Here are some of the housing and mortgage trends you can expect to see in the first quarter of 2012.

If you have been waiting for the market to reach bottom to buy a house, the wait is over in many parts of the country.

"I think we've bottomed out," says Steve Anderson, a broker and owner at RE/MAX Benchmark Realty in Las Vegas. "If anyone wanted to buy a home today, now would be the time."

Anderson says even in foreclosure-plagued Las Vegas, homes priced according to the market have been selling quickly.

Home prices remain lower than about a year ago, but many housing experts say there's not much room for prices to fall further. Nationally, the median home price of existing homes was 3.5 percent lower in November 2011 compared to the previous year, according to the National Association of Realtors, or NAR.

While prices in some areas have taken bigger hits, and it's possible they'll decrease slightly in coming months, waiting to purchase may not pay off, some experts say. That's because if mortgage rates rise, the slightly better prices will not be enough to offset the higher mortgage costs, says White.

"We are either at the bottom or very close to it," White says.

Underwater borrowers, or those who owe more on their mortgages than their houses are worth, have anxiously awaited the day when they will be able to benefit from these historically low rates. That day is near.

The revamped Home Affordable Refinance Program, or HARP 2.0 that was announced in November 2011, allows borrowers to refinance and grab a lower mortgage rate regardless of how deeply underwater they are. The previous version of HARP did not allow refinances for borrowers who owed more than 125 percent of the value of their homes.

Despite the recent changes, most lenders have not been offering refinances under the new guidelines yet, as of early 2012. Industry experts say lenders are still making internal changes and are waiting for Fannie Mae and Freddie Mac to update their automated underwriting systems. The updates should take place by February or March, they say.

And if all goes as planned and lenders embrace the program, "there will be more refinance volume than lenders can handle," says Dan Green, a loan officer at Waterstone Mortgage in Cincinnati.

"Early interest in the HARP program foretells that HARP will be a bigger hit than anyone's imagined," he says. "There are three years of pent-up demand for a product like this."

But some are skeptical because the guidelines are optional and lenders can choose to implement their own "overlays," or restrictive rules.

"I'm cautiously optimistic," says Ed Conarchy of Cherry Creek Mortgage Co. in Gurnee, Ill. "But if lenders are reluctant to do it, I'm not sure it's going to help."

Thanks to the Fed and at the expense of the slow economy, mortgage rates are expected to stay near record lows for at least the first two or three months of the year.

"All indicate interest rates will remain stable for the foreseeable future given what the Fed has done and the nature of the U.S. economy," says Jason Auerbach, division manager of First Choice Loan Services in New York City.

The Mortgage Bankers Association estimates the average 30-year fixed rate will hover around 4.1 percent during the first half of the year, giving buyers and homeowners some extra time to take advantage of the historic rates.

"This is unbelievable," White says. "People who are in the profession have never seen rates this low."

But the caveat applies: Rates are unpredictable and can change at any moment without warning, Auerbach says. That means buyers and homeowners who want to refinance and are able to do so now shouldn't take a chance by waiting.

"There are a lot of buyers thinking rates are going to be the same for a long time, so they are in no hurry to buy," White says. "When rates move up, you'll see those folks get off the fence."

If you plan to buy a house, be ready to compete with local and foreign investors.

On average, 1 in 5 homes sold in 2011 was purchased by an investor, according to the National Association of Realtors. Many of these investors are foreign buyers who want to take advantage of the low prices and the weak dollar.

Buyers from Canada, Mexico, the United Kingdom, China, Brazil and other parts of the world have been actively purchasing vacation and investment properties in the United States, and this trend is expected to grow in 2012, White says.

"You will continue to see a lot of interest from foreign buyers," he says. "With the uncertainty that you see in economies around the world, they view (real estate in the United States) as a safe investment, and there is a large portion of the foreign buyers paying in cash."

Cash purchases account for about 30 percent of all homes sales in the United States, according to the NAR. In hard-hit areas, such as Miami and Las Vegas, cash purchases account for about half of sales.

Many buyers refuse to even consider purchasing a short sale because of the horror stories they have heard about lenders taking more than a year to approve a deal. Those buyers may want to reconsider this option in 2012. The short-sale process has improved and now happens more quickly, for the most part.

Frustrating, long waits still exist for some short sales, but many buyers are closing short-sale purchases in less than 90 days, agents say.

"Short sales are starting to move much quicker," Anderson says. "Everything is starting to get more streamlined. Those that work for the banks are better trained, and the banks more accepting."

Bank-owned properties also are selling faster. If you are eyeing a foreclosed house, don't expect it to stay on the market for long. Real estate agents who specialized in distressed properties say reasonably priced bank-owned houses often get multiple offers and go under contract for sale in days now instead of months.

Despite the high volume of foreclosures, Anderson says because these properties are selling quickly, "Supply is getting low and the demand is high." And, believe it or not, many of these properties are selling for more than the asking price.

"We are getting multiple offers on them," he says.

Your Mortgage Professional

Suzy Keir

239~370~9814

6 Good Reasons to Buy a Home Now

noreply@blogger.com (Suzy Keir) — Thu, 10 Nov 2011 18:12:00 +0000

1. Prices have nearly hit bottom.

In most areas, most of the excess has finally been wrung out of the market. But if you’re buying a first home or looking to trade up, there’s no need to rush. Although prices may fall some more -- blame foreclosures still working their way through the system and tighter credit -- they won’t fall by much. Fiserv Case-Shiller, which tracks home prices, forecasts that the median price nationwide will ratchet down for about six more months, then stay flat for three or four years.

In most of the cities where home values experienced a double dip after the expiration of the home buyer’s tax credit in mid 2010, median prices won’t fall below their 2009 or 2010 lows, says David Stiff, Fiserv’s chief economist. These cities include San Francisco, San Jose, San Diego and Washington, D.C. But in cities with lingering oversupply of homes for sale, Fiserv forecasts a decline of 10% or more in the median home price (for the year ending March 31, 2012). These cities include Riverside–San Bernardino, Cal.; Las Vegas; and Miami.

2. Houses are affordable again.

Homes haven’t been this affordable since 1991. Economists often define affordability as the ratio of median home price to median family income. According to Fiserv Case-Shiller, the U.S. ratio now stands at 2.6 -- down from a peak of 4.1 in mid 2005 and just under the long-term average of 2.8. Of course, some areas continue to defy affordability. In California’s coastal cities and the New York metro area, the ratio is 5 or more. Average mortgage payments are another way to look at affordability. Since the housing market’s peak in 2006, the average principal-and-interest payment in the U.S. has fallen from $1,063 to $645.

Renters considering the jump to homeownership may be encouraged by the price-rent ratio, or the median home price divided by the median annual rent. In 2005, the national median home price had inflated to nearly 21 times the median annual rent, according to Marcus & Millichap, a commercial real estate brokerage company in Encino, Cal. Since the bust, the ratio has deflated to 14, less than the historical average of 15. During the same period, the difference between the median monthly mortgage payment and median monthly rent fell from $745 nationally to $102. Marcus & Millichap expects rental vacancy rates to hit prerecession levels this year, allowing landlords to raise rents by an average of 3.5%.

3. Mortgage rates won't go any lower.

For the past couple of years, interest rates have hovered at levels last seen when the veterans came home from the Korean War. According to HSH.com, which tracks mortgage rates, at the beginning of August the national average 30-year fixed rate was 4.5%. FHA loans, which require only a 3.5% down payment, had a 4.3% rate. Adjustable-rate mortgages are even cheaper, and even rates for jumbo mortgages have hit lows not seen since the 1980s.

Freddie Mac forecasts a 30-year fixed rate of 5% by year-end and 6% by late 2012. Standard & Poor’s downgrade of the U.S. credit rating won’t have an immediate effect on rates because of the weak economy (see Ripple Effects of the U.S. Debt Downgrade). But credit is tighter, and you’ll need a credit score of 740 or more and a down payment of at least 25% to nab the lowest rates. If you fall short of that, you’ll pay interest-rate risk premiums if the bank plans to sell your loan to Fannie Mae or Freddie Mac. For example, lenders must charge an extra 0.25 point if a borrower has a 740 credit score but puts down less than 25% (but at least 20%).

4. It's a buyer's market.

Demand is low; supply is high. In early summer, the National Association of Realtors reported that sales of existing homes (single-family houses and condos) fell by 9% from the year before. NAR also reported 9.5 months’ supply of homes. That’s how long it would take to sell all the homes on the market at the current pace of sales, and it strongly favors buyers. (Four to six months’ supply is considered balanced between buyer and seller.)

With so much selection, you’ll find more properties in good school districts or near your job, or homes that offer added value, such as a mother-in-law suite, says Thomas Popik, research director with the Campbell surveys of real estate professionals. You’ll spend less time shopping and competing against other bidders. And you don’t have to waste time with sellers who set unrealistic prices (although they’re still out there).

One caveat: If you’re searching among entry-level homes, which had more extreme price declines than upper-end houses did over the past year, you may face stiff competition from investors. They typically pay cash, which makes them attractive to sellers who want to close the deal fast. However, says Popik, you may find opportunities in homes that were bought and fixed up by investors, who intended to flip them but have had difficulty making a sale.

5. You may find a distressed property.

Bank-owned foreclosures (or REOs, for “real estate owned” properties) sell for an average discount of 35% off the per-square-foot price of conventional homes for sale, according to RealtyTrac. In the first half of 2011, lenders owned about 870,000 REOs but listed only about one-fifth of them for sale, concentrated in such high-foreclosure states as Arizona, California, Florida, Michigan, Nevada and Ohio; even with the slowdown in the foreclosure pipeline due to legal-processing issues and new supply exceeds sales. Find more on buying foreclosures.

Short sales, or homes sold with lenders’ permission for less than their owners owe on their mortgages, have also grown in number. Lenders have become more amenable to them as they seek to avoid the often huge losses associated with foreclosures, says Rick Sharga, of RealtyTrac. Short sales offer buyers less of a bargain than REOs, but the homes tend to be in better condition. Banks may still take two to six months to sign off on a short sale, so patience is imperative.

6. Homeownership is still attractive.

A home is the biggest purchase most people ever make. But deciding whether and what to buy isn’t purely a financial decision, says Chris Herbert, research director at Harvard’s Joint Center for Housing Studies. When you own a home, you can control your living environment and security, upgrade and change your home as you see fit, and create a sense of rootedness in your community.

You can offset some of the cost of homeownership by deducting mortgage interest. But don’t mistake a home for an investment, at least not in the short run. “If your goal is to jump in and get a return of 6% annually, that’s a bad idea,” says Fiserv’s Stiff, given the forecast for weak price appreciation. Instead, you need to commit to owning the home for at least five to seven years to ride out any further price declines and recoup your down payment and transaction costs. If you think that you might need a bigger home before that time to accommodate a growing family or that you might have to move to another area for your job, don’t buy unless you’re willing to become a long-distance landlord.

Shop carefully, and be patient. Exclusive buyer’s agent Michael Crowley of Spokane, Wash., tells buyers it may take three to four months to find the right house. “We can be in a hurry, or we can be particular, but we can’t be both,” he says.

Renters get help boosting credit scores

noreply@blogger.com (Suzy Keir) — Thu, 29 Sep 2011 20:40:00 +0000

New websites will report your rent-payment history to the credit bureaus for a fee. Paying rent on time could lead to higher scores.

By MSN Money partner on Thu, Sep 29, 2011 11:16 AM

Back in January, one of the major credit-reporting agencies, Experian, announced it would begin including rental payments in its credit score formula.

In response to Experian's decision, a cottage industry of websites has arisen to help consumers make the most of their rental payment from a credit score angle.Williampaid.com, for example, will not only pay your rent for you automatically -- it deducts your payment from your bank account for a $1.75 monthly fee -- it will also report your rental payment to FICO, the main credit-monitoring firm, for $2.50 per month.

There's also a new website called RentReporters.com that opened its digital doors on Monday. The site says it can verify residential rental payments of 100 million U.S. renters and transfer that information to consumer credit reports, thus helping them to boost their credit scores. (Estimate your credit score for free.)

RentReporters takes the rental-payment receipts straight from the landlord and delivers the payment data to credit bureaus for inclusion on consumer credit reports, for $89.95 per year or $5.95 per month after paying a $39.95 setup fee.

RentReporters sends its rental-payment verifications to Payment Reporting Builds Credit, an alternative credit-reporting agency that processes rental-payment data for FICO. That data is transmitted directly into the automated underwriting systems of national lenders.

"Having been where many of our customers are now, I know firsthand the economic circumstances that can result in a poor credit score," says Crispin Luna IV, founder and president of RentReporters. "We allow essentially every renter in the U.S. to take one step closer to homeownership and leverage their rental payments towards a better credit profile."

100 million renters

While it's just Experian right now, RentReporters expects the two other credit-scoring titans to begin including rental payments shortly.

"The significance of the shift from debt-based credit and the impact it will have on the American credit market is huge," adds Luna. "There is no doubt that in the near future Equifax and TransUnion will soon announce the inclusion of rent on their traditional databases."

Experian estimates that there are about 96 million renters in the U.S. -- more than enough to impact the credit and lending markets in a big way in the coming months and years. (The Census Bureau estimates about 100 million renters.)

"Given that one-third of the U.S. population rents, we felt it was imperative to reflect the true creditworthiness of those individuals who responsibly pay their rent," Brannan Johnston, vice president and managing director forExperian RentBureau, said in a press release in January. "Our research shows that over one in three consumers in the highest-risk credit score band will improve to at least the next score band with the addition of positive rental data."

For now, renters have enough resources to leverage their on-time payments into higher credit scores. The question now: How many will do so? With rentals on the rise, more companies will spring up looking to make a buck on the trend.

Suzy Keir ~ 239-370-9814

Mortgage rates at lowest level in six decades!!!!!!

noreply@blogger.com (Suzy Keir) — Wed, 21 Sep 2011 18:10:00 +0000

updated 9/15/2011 10:46:43 AM ET

WASHINGTON — Fixed mortgage rates have fallen to the lowest level in six decades for the second straight week. But few Americans can take advantage of the historically low rates.

Freddie Mac says the average rate on the 30-year fixed mortgage fell to 4.09 percent this week. That's the lowest rate seen since 1951.
The average rate on the 15-year mortgage, a popular refinancing option, fell to 3.30 percent, also a new low.

Economists say it is likely the lowest rate on the 15-year ever.
Mortgage rates tend to track the yield on the 10-year Treasury note. Worries over Europe's debt crisis are pushing investors to shift money into safe Treasurys, forcing the yield lower.
Still, the cheap mortgage rates haven't helped home sales. Few would-be buyers can meet stricter loan requirements.
Call~Suzy Keir~239-370-9814 with questions about Purchasing or Refinancing.....I can get it DONE!

How to jump through condo-lending hoops.........

noreply@blogger.com (Suzy Keir) — Tue, 19 Jul 2011 19:08:00 +0000

Whether buying or refinancing, getting a loan on a condo is hard. Here's what you should know...

Borrowers run into two problems when getting a mortgage on a condominium: strict standards that make it hard to qualify for a condo loan and high costs.

These issues beset condo buyers who want to get mortgages as well as people who already own condos and want to refinance.

"Condos are like the canary in the coal mine, a leading indicator of the health of the real-estate market," says John McClellan, a branch manager with Supreme Lending in Austin, Texas. "Recently, lenders' biggest losses came from condos, so they are viewed as risky."

Some lenders reject condo loans altogether. This is why it is good to work with a broker they will know which lenders are easy to work with for condo loans and which lenders to stay away from.

Condo loans have to jump through two hoops. First the borrower has to qualify. Then the condo association has to qualify, over which the borrower has little or no control.

"Condo financing is very situational because it depends not only on the borrower but also on the project itself," says Matt Ostrander, CEO of Parkside Lending LLC in San Francisco. "The guidelines have tightened because lenders want to see a financially healthy condo development. They want to see a higher concentration of owner-occupants, and they want to see that delinquency rates on condo fees are low."

Standards differ
Lenders follow guidelines from the Federal Housing Administration, Fannie Mae and Freddie Mac for condo mortgages.

Among Fannie Mae's requirements:

· More than half of the condo units must be owner-occupied.

· No owner may own more than 10% of the units.

· No more than 15% of owners can be delinquent on condo dues.

· All amenities must be completed if the development is more than 12 months old.

· Buyers who make a down payment of less than 25% will pay an additional 0.75% of the loan amount at closing or an interest rate that is about 0.25% higher.

The FHA has much friendlier down-payment requirements but has strict guidelines for condo associations.

"It's a misconception on the part of the public that you can't buy a condo without a big down payment," says Ed Wilburn, a mortgage banker with FEMBi Mortgage in Miami. "The rules are stricter now, but if you find a building that has already earned an FHA approval, you can get in with a down payment of 3.5%.

"FHA approval depends on the financial health of the condo, so the condo association needs to prove that they have adequate insurance, a budget with reserves, no pending lawsuits and no anticipated special assessments."

Where to begin

Condo buyers should start by checking to see if a building is approved for FHA loans. If not, they can ask the lender to see if the building meets Fannie Mae and Freddie Mac guidelines. Buyers can ask condominium managers if they have recently completed a homeowner-association certification or questionnaire, which provides information on condo-fee delinquencies, insurance and other factors that affect eligibility for loans.

"Even if the condo meets the Fannie Mae guidelines, buyers may find that they must make a down payment of 20% or more because mortgage-insurance companies are less willing to provide mortgage insurance on condo loans, (because) they are considered riskier," Wilburn says. "In fact, most mortgage-insurance companies won't insure a Florida condo. It may be easier in other markets."

McClellan says a local lender will know which local complexes have FHA or Fannie Mae approvals.

"Have a list of places you like and check the status of their approval" with the lender, he says.

Options thin out
Condos that are not approved for FHA or Fannie Mae financing are known as "nonwarrantable" and offer few options for buyers or refinancers.

"Buyers can either pay cash, or they can look for a local bank that is willing to lend," McClellan says, "but they should be prepared with a hefty down payment of 50% or more, have excellent credit and still be prepared to pay a higher interest rate. They should expect to pay as much as 7.5% when rates are 4.5% for other loans."

Homeowners interested in refinancing will first need to face the potential problem of a lack of equity, because condo values have dropped in many areas.

"Condo owners can ask their management company if their complex is FHA- or Fannie Mae-approved, and if (the complex is) not, they may want to contact a local lender to see if they start the process for obtaining an approval," McClellan says. "It's in the best interest of all the owners to do what they can to meet FHA guidelines, (because) that approval can increase the value of all the homes in the development."

Naples Condos

Waterfront Condos in Naples Florida are some of the countrys most beautiful waterfront real estate located along the Gulf of Mexico and canals that wind. Magnificent condos in downtown Naples are just steps from the Gulf of Mexico. In Olde Naples there are beautiful waterfront condos along 5th Avenue and 3rd Avenue that are steps from shopping and white sugar sand beaches along the coast. There are also many condos in North Naples too choose from that have the lifestyle of golf, tennis, biking trails and on site workout rooms.

I have all the tools to help you finance your condo purchase.

Suzy Keir ~ 239-370-9814

By Michele Lerner of Bankrate.com

How to Refinance in Florida

noreply@blogger.com (Suzy Keir) — Wed, 29 Jun 2011 16:14:00 +0000

Many homeowners missed the boat to refinance their mortgages due to deflated values and drastically tightened lending standards as a precaution against further declines in Florida home values. Here are some guidelines if you are still considering refinancing.

Look at your current county tax appraisal: for collier county http://www.collierappraiser.com in lee county http://www.leetc.com .Then look at the online estimate value through: http://www.zillow.com. Neither the tax collector or the online home value estimate will give you an exact market value but these tools do give you a good idea of your homes worth.
Then pull your current mortgage statement(s) to check your outstanding balance(s). Divide your existing balance(s) into the higher of your tax appraisal or the online zillow estimate. Multiply the answer by 100 to determine your current loan to value. Now depending on who your original loan was backed by will determine how high your loan to value may go up to and in some instances you can reach as high as 125%.
Contact Suzy Keir 239-370-9814, she can help you determine if your current loan qualifies you for these higher loan to values and if your current interest rate is high enough to refinance to a lower rate and lower mortgage payment.

Wishing everyone a very Happy Fourth of July!!!!

How to Prepare for Hurricane Season.............................

noreply@blogger.com (Suzy Keir) — Thu, 26 May 2011 17:58:00 +0000

June 1st is the beginning of Hurricane Season

"Preventing the loss of life and minimizing the damage to property from hurricanes are responsibilities that are shared by all."Throughout this Web site, information has been provided regarding actions that you can take based on specific hurricane hazards. The most important thing that you can do is to be informed and prepared. Disaster prevention includes both being prepared as well as reducing damages (mitigation).

Disaster Prevention should include:

One of the most important decisions you will have to make is "Should I Evacuate?"
If you are asked to evacuate, you should do so without delay. But unless you live in a coastal or low-lying area, an area that floods frequently, or in manufactured housing, it is unlikely that emergency managers will ask you to evacuate. That means that it is important for you and your family to HAVE A PLAN that makes you as safe as possible in your home.
Disaster prevention includes modifying your home to strengthen it against storms so that you can be as safe as possible. It also includes having the supplies on hand to weather the storm. The suggestions provided here are only guides. You should use common sense in your disaster prevention.

DEVELOP A FAMILY PLAN - Your family's plan should be based on your vulnerability to the Hurricane Hazards. You should keep a written plan and share your plan with other friends or family.
CREATE A DISASTER SUPPLY KIT - There are certain items you need to have regardless of where you ride out a hurricane. The disaster supply kit is a useful tool when you evacuate as well as making you as safe as possible in your home.
SECURE YOUR HOME - There are things that you can do to make your home more secure and able to withstand stronger storms.
ONLINE VULNERABILITY INFO - There are web sites that can give you information about your communities vulnerability to specific hazards. These include hurricanes as well as other weather related hazards.

RELATED INFORMATION• ONLINE VULNERABILITY INFO
• PDF RESOURCES

RELATED MULTIMEDIA• AGAINST THE WIND (0.2mb)• MAX MAYFIELD DISCUSSES - BEING PREPARED (0.1mb MP3)• MAX MAYFIELD DISCUSSES - HAVING A PLAN (0.1mb MP3)

RELATED WEBSITES• FEDERAL EMERGENCY MANAGEMENT AGENCY• AMERICAN RED CROSS

ADDITIONAL SAFETY INFORMATION

FAMILY DISASTER PLAN
Discuss the type of hazards that could affect your family. Know your home's vulnerability to storm surge, flooding and wind.

Locate a safe room or the safest areas in your home for each hurricane hazard. In certain circumstances the safest areas may not be your home but within your community.

Determine escape routes from your home and places to meet.

Have an out-of-state friend as a family contact, so all your family members have a single point of contact.

Make a plan now for what to do with your pets if you need to evacuate.

Post emergency telephone numbers by your phones and make sure your children know how and when to call 911.

Check your insurance coverage - flood damage is not usually covered by homeowners insurance. National Flood Insurance Program

Stock non-perishable emergency supplies and a Disaster Supply Kit.

Use a NOAA weather radio. Remember to replace its battery every 6 months, as you do with your smoke detectors.

Take First Aid, CPR and disaster preparedness classes.

Evaluating and Understanding Appraisals

noreply@blogger.com (Suzy Keir) — Wed, 18 May 2011 14:41:00 +0000

Understanding Appraisals

Mortgage lenders require an appraisal of the property they are financing in order to determine the property’s value to make sure they are not lending you more money than the property is worth. Your lender orders the appraisal, and you are responsible for paying the fee. Costs can vary from $250.00 to $500.00. The property is the collateral for your mortgage so you can understand their concern that they will be able to get their money back if you default, and they have to foreclose and sell your home. Lending guidelines have become stricter now because of the record number of foreclosures that have occurred the past few years making it harder to get loans even if you have good credit. An appraisal is just one assurance that the lender has that they are making a low risk loan. They are also concerned about your credit and payment history.

What Type of Information is in an Appraisal?

Appraisal reports contain the property dimensions, including the lot size and sq. footage of the home, the number of rooms, upgrades and amenities, the year built and the property location. The appraisal can be done two ways. First by using the sales comparison approach and second by using the cost approach. The sales comparison approach is used for resale property by comparing at least three to five other similar properties that have recently sold and making adjustments up or down based upon the subject property’s size and features. The cost approach is used for new construction by calculating the replacement cost to rebuild the home if it were damaged or destroyed.

What is the Appraised Value?

The appraised value is what your home is worth in today’s market. If the home does not appraise, you have a couple options. Put more money down, ask the seller for a price reduction, pay for a second appraisal or walk away from the transaction and find another home. While you don’t get to choose the appraiser, you can make a request that the lender use a local appraiser. The reason a local appraiser is better is they are familiar with the area as opposed to an outside appraiser who doesn’t understand the quirks of your local market. There is no guarantee that the lender will pay attention to your request, but it doesn’t hurt to make it.
It is important to understand how the appraisal process works and its important when purchasing a home. While you don’t need to be an expert, you should have a general understanding. Your mortgage broker or lender will also be able to answer any questions you may have as well.

Suzy Keir 239-370-9814

Five Trends of How Borrowers Loan Cost Could Increase!!!!!

noreply@blogger.com (Suzy Keir) — Mon, 09 May 2011 17:58:00 +0000

Mortgage interest rates have moved up, down and sideways in recent months. Yet apart from that volatility, some key trends could make mortgages more expensive regardless of their eventual rates.

Here's a look at five trends and how they could raise borrowers' loan costs.

Feds restrict loan officers' pay

A new federal regulation that restricts how loan officers are compensated might result in higher costs for borrowers.

So far, no one knows exactly how the rule, which went into effect April 1, will play out, but one result could be fewer choices of interest rate and fee combinations, says Reggie Green, a loan officer at Firstline Mortgage/Crossline Capital in Chandler, Ariz.

"You're going to see two options," Green says. "Pay all the loan officer's compensation upfront or take a higher rate and the loan officer gets totally paid through the rate."

The rule "is already sounding like it's a shell game," says Gary Parkes, a loan officer at Acopia Home Loans in Woodstock, Ga.

Parkes says the rule could be especially problematic for smaller loan amounts because the loan officer won't earn enough to justify the time involved.

"The numbers are just not going to really work," he says.

Loan officers are virtually unanimous in their opposition to the rule, so much so that two trade organizations sued the Federal Reserve to try to stop it from taking effect.

Fannie, Freddie raise risk-based prices

Borrowers who have a middling credit score, a small down payment relative to the property's purchase price or little equity relative to their home's value will be subject to higher interest rates on so-called conforming loans that lenders can sell to Fannie Mae or Freddie Mac.

The higher interest rates occur because the two government-controlled entities adjusted their risk-basing pricing structures, effective since March 1 for Freddie Mac and April 1 for Fannie Mae.

Borrowers can avoid the higher rates by paying points upfront, says Jim Sahnger, a mortgage consultant at FBC Mortgage in Jupiter, Fla. One point is equal to 1% of the loan amount.

"Depending on the equity in the house and their credit scenario, they're going to pay a minimum of another quarter-point upfront to get the lowest rate or their rate is going to be higher," he says.

Risk-based pricing is a good concept, but the adjustments "send the wrong message," says Fred Arnold, a loan originator and branch manager at American Pacific Mortgage in Santa Clarita, Calif.

"It's going to prevent a lot of people from refinancing or being able to qualify for a purchase," he says.

FHA raises premiums

Borrowers who opt for a loan insured by the Federal Housing Administration will face higher costs.

Effective April 18, the FHA plans to raise its annual mortgage insurance premium by one-quarter of a percentage point on all 15-year and 30-year loans.The extra quarter-point is intended to bolster the FHA's congressionally mandated capital reserves.

On average, borrowers will pay approximately $30 more per month, according to the Department of Housing and Urban Development, which says this "marginal increase" would be "affordable for almost all homebuyers who would qualify for a new loan."

Parkes has a different take, saying the increase will push some borrowers' debt-to-income ratio beyond the allowable limit to qualify.

"Thirty dollars," he says, "can make or break a deal nowadays."

'Qualified residential mortgage' defined

Another development that might lead to higher loan costs is the federal government's definition, proposed in late March, of a qualified residential mortgage.

Federal law will allow lenders to buy and sell whole QRMs, but require them to keep a 5% ownership interest in any mortgages that don't fit the definition.

As proposed in late March, the definition includes a 20% down payment to buy a home, 25% equity to refinance an existing mortgage and 30% if the refinance has a cash-out component. Loans that feature negative amortization, interest-only payments or onerous rate resets wouldn't be allowed as QRMs.

In the past few years, many homeowners have made down payments of less than 20%. The stricter requirements on down payments means borrowers will have to shell out more money at the outset. It's too early to know how the rules will affect interest rates, but it's possible that the rates and fees on non-QRM loans will be higher if those loans are deemed riskier.

FHA loans and loans guaranteed by the Department of Veterans Affairs are exempt from the rule.

The proposal is open to public comment and subject to revision.

Lower limits mean more jumbos

Borrowers who live in a relatively expensive housing market and who want a loan of more than $625,500 will pay more for their mortgage later this year.

Effective Oct. 1, the top limit for conforming loans is set to drop from the temporary $729,750 to the general $625,500 in high-cost housing markets. Conforming loans are eligible for sale to Fannie Mae and Freddie Mac, and generally have the lowest rates. When the limit drops, borrowers who want a bigger loan will have to get a jumbo mortgage, which entails a higher interest rate and tighter guidelines to qualify.

Borrowers have a few options to contain the cost, says Ginny Ferguson, president of Heritage Valley Mortgage in Pleasanton, Calif.

Those include:

Getting a loan before the limit drops.

Making a larger down payment.

Bringing cash into a refinancing.

Taking out two loans to keep the first lower than the limit.

Loan limits in lower-cost housing markets also may drop because of lower median home prices on which the limits are based. That suggests some borrowers in those markets could be pushed into more expensive loans as well.

This article was reported by Marcie Geffner for Bankrate.com.

Short Sales and Mortgage Modifications May Have Tax Implications

noreply@blogger.com (Suzy Keir) — Sun, 13 Mar 2011 14:50:00 +0000

Short Sales and Mortgage Modifications May Have Tax Implications

If you have conducted a short sale or received a loan modification in the past year, you could owe taxes on the debt forgiven by your lender. It is very important to be aware of the tax implications of mortgage debt forgiveness so you don’t incur tax penalties. Before we begin, I want to emphasize that I am not an accountant or tax lawyer, and this is for informational purposes only. Always consult your attorney or accountant before making tax-related decisions.

In the past, most forgiven debt was taxable. Then, in response to the foreclosure crisis, the Mortgage Forgiveness Debt Relief Act of 2007 was enacted. It provides special exemptions that relieve homeowners from paying taxes on forgiven mortgage debt, but only under certain circumstances. Up to $2 million of forgiven debt is eligible under the exemption. Legislation has now extended this exemption through 2012.

In order to qualify for forgiveness, that debt forgiven must:

“be used to buy, build or substantially improve the taxpayer’s principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the anmount of the old mortgagte principal, just before refinancing.
Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief based on insolvency, for example, may be available.”

It is especially important to realize that if you took out a HELOC of line of credit on your home at some point in the past, and did not use that money for a qualifying reason, and that debt was later forgiven, you will likely have to pay taxes on it. The following hypothetical example is from IRS publication 4681, and probably applies to plenty of people:

“Ken incurred recourse debt of $800,000 when he bought his main home for $880,000. When the FMV of the property was $1,000,000, Ken refinanced the debt for $850,000. At the time of the refinancing, the principal balance of the original mortgage loan was $740,000. Ken used the $110,000 he obtained from the refinancing ($850,000 minus $740,000) to pay off his credit cards and to buy a new car.

About 2 years after the refinancing, Ken lost his job and was unable to get another job paying a comparable salary. Ken’s home had declined in value to between $700,000 and $750,000. Based on Ken’s circumstances, the lender agreed to allow a short sale of the property for $735,000 and to cancel the remaining $115,000 of the $850,000 debt. Under the ordering rule, Ken can exclude only $5,000 of the canceled debt from his income under the exclusion for canceled qualified principal residence indebtedness ($115,000 canceled debt minus the $110,000 amount of the debt that was not qualified principal residence indebtedness). Ken must include the remaining $110,000 of canceled debt in income on line 21 of his Form 1040 (unless another exception or exclusion applies)”

If debt was forgiven you will receive a form 1099-C from your lender. Complete information on debt forgiveness can be found in IRS Publication 4681 (Canceled Debts, Foreclosures, Repossessions, and Abandonments. Again, I urge you to contact a qualified professional when dealing with debt forgiveness issues.

6 Reasons Why It’s Smart to Buy a Vacation Rental Home Now!!!!!!

noreply@blogger.com (Suzy Keir) — Fri, 25 Feb 2011 19:00:00 +0000

RISMEDIA, October 22, 2010—

Lately, you’ve been thinking a lot about investing strategies. You have a small nest egg that needs to grow, but frankly you don’t trust the stock market. And while real estate has been somewhat of a rocky road in recent years, it’s still a solid long-term investment strategy—and clearly we’re in a buyer’s market. But you aren’t really interested in being a landlord. So what can you do?

Christine Karpinski has a suggestion: Purchase a vacation home and rent it out to travelers.

“Vacation homes are almost always a good investment,” says Karpinski, director of Owner Community for HomeAway—one of the world’s leading vacation rental marketplaces—and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment.

“First, if you’re looking for a good long-term investment, real estate tends to be a good bet,” she adds. “Second, vacation properties have the ability to pay for themselves, and owners often earn a profit in rental income. Third, the investment comes with the desirable perk of having a place at the beach or in the mountains to call your own. And finally, there has never been a better time to buy a vacation home—it’s like the planets have all lined up perfectly.”

If you are interested in purchasing a vacation home, Karpinski describes why there’s never been a better time to go vacation rental house hunting:

There have never been so many properties on the market. For potential home buyers, there is a silver lining to the slow economy and the housing crisis: Most vacation markets are chock-full of buying opportunities. Once you’ve pinpointed the vacation rental market that is right for you—The coast? The mountains? A ski resort area?—you will likely have a lot of properties to choose from.

Prices aren’t going to get much better. In fact, they’re the lowest they’ve been in five to ten years. If you’re pretty sure you want to buy a vacation home “someday,” you might want to quit procrastinating and pull the trigger, says Karpinski.

Interest rates are very favorable for purchasing. Today, mortgage interest rates are low. Bottom line: Take advantage of them while they last.

You have access to the best real estate professionals. Anyone connected to the housing market who managed to survive the housing crash had to be at the top of his or her game. That means the agents left standing today—including the ones you’ll be working with in your search for the perfect vacation home—are possibly the best of the best.

It’s never been easier to rent your vacation home. As mentioned earlier, vacation home rentals have never been more popular. More and more consumers are choosing to stay in cozy condos, cabins, and chalets instead of cramped, impersonal hotel rooms when they travel. And as market demand has surged, organizations have sprung up to help connect vacation homeowners with these potential renters.

If you buy now, you can be ready for the peak season. It’s true that the longer you wait to buy, the likelier it is that interest rates could rise. But there’s another reason not to procrastinate: If you buy now, you’ll have time to get your property ready for peak rental season. Experienced vacation homeowners often find that the rental fees generated during the twelve weeks between Memorial Day and Labor Day pay their mortgages for an entire year—and most inquiries come in between January and March.

“Even turnkey properties aren’t really turnkey,” notes Karpinski. “To get your property up to your standards, there will very likely be things you will want to spruce up. Rooms might need repainting. Decorating will need to be done. And the yard might need some work. Buying now will provide you with a cushion of time to get the home ready for your guests, take great photos for your property listing, and start marketing it to potential renters.”

RISMedia welcomes your questions and comments. Send your e-mail to:realestatemagazinefeedback@rismedia.com.

Have you heard about RISMedia’s Real Estate Information Network® (RREIN)? RREIN is an elite network of leading real estate companies dedicated to providing consumers and their agents with leading real estate information, and committed to the belief that Information Share Equals Market Share. Having only launched this past June 2010, the RREIN network is already comprised of 30 leading brokerages, which make up 525 offices, 30,000 agents, 160,000 closings and represents over $40 billion in transactions. How can RREIN help your recruiting efforts and differentiate your company today? For more information, email rrein@rismedia.com.

Why a foreclosure takes forever and ever.................................

noreply@blogger.com (Suzy Keir) — Fri, 18 Feb 2011 17:15:00 +0000

Blame courts? Blame servicers? Blame borrowers themselves? Yes, yes and yes. Here's why foreclosures can take hundreds of days to sort out.

That's the longest average in the nation, but not by much, according to LPS Applied Analytics, a research firm in Jacksonville, Fla. Loans in foreclosure in Florida, New Jersey, Hawaii and Maine have been delinquent more than 500 days, on average, while home loans in California and Nevada have been delinquent 461 and 427 days, respectively. In the two speediest states, Nebraska and Wyoming, loans in foreclosure are delinquent by an average of 358 days.Six hundred days. That's the average time mortgage loans in foreclosure in New York have been delinquent.

(Bing:What's the U.S. average for foreclosure length?)

Those statistics raise a question: Why do foreclosures take so long?

In one case, Olefson says, "We went down for the hearing and the judge said, that morning, 'You are moved to (another) judge,' and we went to that judge, and the earliest hearing date he (had was in) April."The courts
Some states use a judicial foreclosure process. The causes of delays in the 23 judicial-foreclosure states include backlogged courts, antiquated systems and judges' schedules, says Shari Olefson, an attorney with Fowler White Boggs in Fort Lauderdale, Fla., and author of "Foreclosure Nation," a book about the subprime-mortgage crisis.

MSN Money: Foreclosures at rock-bottom prices

The problem may be most severe in Florida, which largest foreclosure volume in the country, says Rick Sharga, senior vice president at RealtyTrac, a foreclosure-information service in Irvine, Calif. The backlog in Florida has been so severe that the state has set up separate courts and brought in retired judges to handle foreclosure cases.

On our blog, 'Listed': Foreclosures down 17% from a year ago — but hold your applause

Government officials and agencies cause delays through temporary moratoriums, mandatory mediation sessions and loan-modification or assistance programs such as the federal Home Affordable Modification Program.

Find foreclosure bargains for sale

The servicers
Mortgage servicers, the companies that process monthly loan payments, have been equally ill-equipped to handle the large volume of foreclosures. While it may seem counterintuitive, they have reasons to drag their feet:

Servicers' philosophies and directives are "constantly in flux," Olefson says. One may need to raise cash to meet regulatory guidelines, while another may have too much unsold real estate on its books. Staid corporate cultures and high staff turnover contribute to slow decision-making.

Servicers don't want to take on the legal and financial responsibilities of owning more homes. As soon as the foreclosure is complete, the lender "immediately assumes liability and carrying costs," Sharga says. These costs include property taxes, casualty insurance, repairs and maintenance, and homeowner-association dues.

Read: Faces of the foreclosure crisis

Lenders are loath to write off losses on unpaid loans. "Foreclosure typically isn't making a profit," Sharga says. "It's minimizing a loss. It's hard to get the (investors) who own the notes excited about spending more money to execute a foreclosure. Ironically, the longer these things take, the more it costs."

Read: The 25-year 'foreclosure from hell'

Lenders securitized and sold many of their loans to investors, whose objectives may conflict. One investor may want to foreclose quickly and take the cash, Sharga says, while another might want to keep the loan and pressure the borrower to resume payments. Disagreements lead to process paralysis.

Read: Can foreclosure trustees be trusted?

Lenders may be especially unwilling to negotiate settlements with borrowers who own expensive homes and are believed to have fraudulently hidden other assets in overseas bank accounts, Olefson says. "The banks are a lot less likely to settle because their feeling is that (the borrower) has assets somewhere or will have assets," she says.
A rumor, true or not, that the Federal Deposit Insurance Corp. may take over a lender can cause disruptions and delays, Olefson says. Lenders, investors and borrowers tend to think they'll get a better loan-workout deal if the government agency steps in, but that's a "complete misconception," she says. (Bing: Find information on the most recent 'failed banks')

The borrowers
Years ago, foreclosures usually were uncontested, but today, homeowners are more likely to hire a foreclosure attorney to stall the outcome, Olefson says.

Read: 8 tips for choosing a foreclosure attorney

Bankruptcy and other court filings can delay a foreclosure, but these actions may be costly for the borrower. Default interest, force-placed insurance, property taxes and legal fees can all end up on the borrower's account and may be subject to a deficiency judgment in some states.

"Foreclosure used to be a one-sided deal," she says, "but now, we have borrowers' defense counsel out drumming up business."

Read: February buying advice: Should you wait to buy a home?
"Until that summary judgment is issued, and there is a foreclosure sale, the borrower is responsible," Olefson says.
Borrowers who want to speed up a foreclosure often are out of luck. Unless the lender will approve a short sale or accept a deed in lieu of one, the process must move forward along its long, slow course.
By Marcie Geffner of Bankrate.com

Are You Looking For A New Mortgage Broker??????

noreply@blogger.com (Suzy Keir) — Tue, 18 Jan 2011 17:01:00 +0000

Because You Lost Your Old One Due to Tighter And New Regulations.................

Statistics show that there is a huge fall out of Mortgage Brokerage Businesses and Individual Licensed Mortgage Brokers, due to the new State and Federal Regulations.

As of January 1, all Mortgage Brokers and Correspondent Lenders must complete the following State and Federal requirements or they can not conduct business.

Pass State ad Federal exams
Satisfy pre-licensing education
Satisfy State and Federal background checks
Credit Report

The Florida Office of Financial Regulation statistics show in December only 25% of current brokers had met the above requirements, only 15% of mortgage companies had submitted their applications , and only 23% of mortgage brokerage branches have applied for renewal of license.

In essence, Bank employees do not have to follow any of the previously stated criteria.

This is why you should send your referrals to a Licensed Mortgage Originator who is screened and monitored by the State and Federal Regulatory Agencies.

As we move into the year 2011, I am optimistic about our industry. Based on current economic news and statistics, I believe that some of the past obstacles will become new opportunities.

I look forward to doing business with you in 2011!!!

Suzy Keir
Licensed Mortgage Broker
239-370-9814

How to pay your mortgage biweekly without the high fees!!!!!!!!!

noreply@blogger.com (Suzy Keir) — Fri, 03 Dec 2010 21:27:00 +0000

How to pay biweekly mortgage the right way

Although most lenders charge borrowers to join one of these interest-saving payment plans, there are plenty of other ways you can make a biweekly payment without paying added fees.

Posted by Mai Ling at MSN Real Estate on Friday, December 3, 2010 10:46 AM

I first heard about biweekly mortgage payment plans when I became a homeowner, and although it sounded like a brilliant way to save, it seemed as if I had more than enough on my plate as a new homeowner than to try to figure out how to join such a plan.

As a personal finance column from the Los Angeles Timesexplains, paying off your mortgage biweekly rather than monthly can shave years off the life of your loan and save you thousands of dollars in interest — just because of the one extra mortgage payment you make each year.

Shorter loans are not for everyone

However, it sounds like I wasn't the only one who was wary of these payment plans, since it turns out that signing up for such a plan through your lender might not be the most cost-effective way to make those payments. (Bing: Looking for a lender?)

L.A. Times columnist Kathy Kristof says most lenders charge customers to join these payment plans, and although the charges don't cancel out your savings, they still sort of defeat the whole purpose of making the biweekly payments in the first place, which is to save money. She provides this example:

A consumer with a $200,000, 30-year mortgage at 5%, for example, could pay off this loan five years faster and save $33,000 in interest by paying biweekly, said Diana Rodriguez, a spokeswoman for Wells Fargo Bank.

However, if that same homeowner joined a payment plan through a lender such as Citibank, he'd pay $375 just to join -- then $1.50 for each "transaction," which would amount to $39 a year -- costing you a total of $1,350 after 25 years, Kristof explains. (Wells Fargo's plan is free, she notes.)

10 savvy homebuying tips for 2010

You still save more than $30,000, but wouldn't you rather save that $1,350, too?

Well, according to Kristof, you can easily save that money through myriad other avenues to make that biweekly payment that don't involve joining a plan through your lender:

Want a great mortgage rate? Buy new

Set up your own automatic payments

Although mortgage lenders don't usually charge you to make more than one payment a month, Kristof says it's best to check first to make sure you and your bank are on the same page. "Some might deduct the midmonth payment from principal, and then still expect the full payment on the first," she writes.

Simply make one extra payment each year

Making one full extra payment might not be as painless as the biweekly plan, which you might not even notice, since the extra two half-payments are made gradually through the year. But having the option to make the extra payment also offers you the flexibility to make that payment when you have a bit more money on hand.

What to do when you're late on the mortgage

Pay extra each month

There are two different ways you can do this: You can simply pay an additional amount each month that you can easily afford, maybe rounding up to the next $100; or pay for a full mortgage payment through the duration of the year by dividing it by 12, and paying that amount each month. Kristof explains:

If you had that $200,000 loan at 5%, for example, your normal monthly payment would amount to $1,073.64. Divide that by 12 and you get about $89.50. Add that to your normal payment and you'd be sending in roughly $1,163 a month.

No more dragging my feet on this one. It's time to start saving!

Daylight saving time ends this weekend!

noreply@blogger.com (Suzy Keir) — Thu, 04 Nov 2010 18:27:00 +0000

"Set Your clocks" this Sunday, people across the country will be enjoying one extra hour of sleep, thanks to the end of Daylight Saving Time.

Clocks will “fall back” one hour at 2 a.m. Sunday morning.
We'll resume daylight saving time next spring, on March 13.

The change marks the end of Daylight Saving Time, which is observed to get more daylight hours out of the summer months.

The Florida Highway Patrol is reminding drivers to be alert to the change, as it will be darker. A special concern is for children waiting early in the morning at their bus stop.

Mortgage rates fall to decades-low of 4.27 pct.

noreply@blogger.com (Suzy Keir) — Thu, 07 Oct 2010 17:07:00 +0000

Thursday, October 7, 2010 As of 12:39 PM Average mortgage rates in the U.S. continued their fall in the past week, with the average rates on 30-year fixed and two other loans setting a record low, Freddie Mac said Thursday.

The Wall Street Journal Family Finances

Rates have slumped for months because Treasury yields have slid amid to economic uncertainty and Federal Reserve rates that remain near zero. They resumed their retreat after increasing for a few weeks beginning at the end of August. Mortgage rates generally track the yields, which move inversely to Treasury prices.

Data suggesting inflation is "running at a tepid pace at best" have allowed "mortgage rates to ease to new or near record lows this week," said Freddie Mac Chief Economist Frank Nothaft.

The 30-year fixed-rate mortgage averaged 4.27% for the week ended Thursday, down from the prior week's 4.32% and 4.87% a year ago. Freddie has been tracking such rates since 1971.

The 15-year fixed mortgage averaged 3.72%, down from 3.75% the previous week and 4.33% in the like 2009 period. The latest week's figure was the lowest since Freddie started tracking such loans in 1991.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.47%, another low. They were down from the prior week's 3.52% and 4.35% a year earlier. One-year Treasury-indexed adjustable rate mortgages were 3.4%, down from 3.48% on the week and 4.53% a year earlier.

Contact Suzy Keir for more information to purchase or refinance!!!
Call 239-370-9814

Email Suzy@naplesflamortgage.com

10 Reason To Buy A Home

noreply@blogger.com (Suzy Keir) — Thu, 16 Sep 2010 22:04:00 +0000

10 Reasons To Buy a Home Enough with the doom and gloom about homeownership. Brett Arends explains why owning a home is a good thing.By BRETT ARENDS..ArticleVideoComments (129)more in Investing

Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up.

The Sept. 6 cover of Time magazine: This is what capitulation looks like.

.After all, at the peak of the bubble five years ago, Time had a different take. "Home Sweet Home," declared its cover then, as it celebrated the boom and asked: "Will your house make you rich?"

But it's not enough just to be contrarian. So here are 10 reasons why it's good to buy a home.

1. You can get a good deal. Especially if you play hardball. This is a buyer's market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We're four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it's mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You'll never catch the bottom. It doesn't really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
Brett Arends discusses why he thinks now is a particularly good time to buy a home.
2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won't see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.
3. You'll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you'll get a tax break on capital gains–if any–when you sell. Sure, you'll need to do your math. You'll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
4. It'll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You'll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. "You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy." It was a small sign that said something big.

More on the Developments Blog

Buying a Home, Good Idea?

With Little to Do, Home Builders Focus on Quality

In Monaco, the 'Most Expensive' Home

House of the Day: Private Maine Island
5. You'll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you're better off buying.
6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.
Associated Press
A house for sale in Shelby, Ohio.
7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.
8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.
9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.
10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the "glut" simply won't matter: It's concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town.

Write to Brett Arends at brett.arends@wsj.com

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

5 Reasons Homeownership Trumps Renting

noreply@blogger.com (Suzy Keir) — Tue, 07 Sep 2010 16:10:00 +0000

The seemingly endless run of bad housing news is discouraging some potential home buyers from considering a purchase. But the truth is that the advantages of home ownership have very little to do with investment gains. The best things about owning a home have a lot more to do with personal comfort and satisfaction.

Here are five of them:

Be your own landlord. The bank can only kick you out if you don't pay; a landlord can be much less dependable -- deciding to sell the property or choosing to live there themselves.
Paying the principle is forced savings. Yes, it's possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.
Fixed -rate mortgages never rise -- and eventually you pay them off. With mortgage rates at record lows, people who now are locking in real bargains.
Good Schools. Family-sized rentals are harder to come by in areas with excellent public schools.
Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned --not rented.

Source New York Times, Ron Lieber (08/27/2010)

Top 10 DON'TS During the Loan Process

noreply@blogger.com (Suzy Keir) — Tue, 29 Jun 2010 19:36:00 +0000

1. DON’T DO ANYTHING THAT WILL CAUSE A RED FLAG TO BE RAISED BY THE SCORING SYSTEM. This would include adding new accounts, co-signing on a loan, changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.

2. DON’T APPLY FOR NEW CREDIT OF ANY KIND. Including those “You have been pre-approved” credit card invitations that you receive in the mail or online. Every time that you have your credit pulled by a potential creditor or lender, you lose points from your credit score immediately. Depending on the elements in your current credit report, you could lose anywhere from one to 20 points for one hard inquiry.

3. DON’T PAY OFF COLLECTIONS OR CHARGE OFFS during the loan process. Unless you can negotiate a delete letter, paying collections will decrease the credit score immediately due to the date of last activity becoming recent. If you want to pay off old accounts, do it through escrow – at closing.

4. DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS. This is the fastest way to bring your scores down 50-100 points immediately. Try to keep your credit card balances below 30% of their available limit at ALL times during the loan process. If you decide to pay down balances, do it across the board. Meaning, pay balances to bring your balance to limit ratio to the same level on each card (i.e. all to 30% of the limit, or all to 40% etc.)

5. DON’T CONSOLIDATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS. It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above in 4. If you want to save money on credit card interest rates, wait until after closing.

6. DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account, you will lose available credit, and it will appear to the FICO that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you HAVE to close a credit card account, do it after closing.
7. DON’T PAY LATE. Stay current on existing accounts. Under the new FICO scoring model, one 30-day late can cost you anywhere from 50-100 points, and points lost for late pays take several months if not years to recover.

8. DON’T ALLOW ANY ACCOUNTS TO RUN PAST DUE --EVEN 1 DAY! Most cards offer a grace period, however, what they don’t tell you is that once the due date passes, that account will show a past due amount on your credit report. Past due balances can also drop scores by 50+ points.

9. DON’T DISPUTE ANYTHING ON YOUR CREDIT REPORT once the loan process has started. When yousend a letter of dispute to the credit reporting agencies, a note is put onto your credit report, and when the underwriter notices items in dispute, in many instances, they will not process the loan until the note is removedand new credit scores are pulled. Why? Because in some instances credit scoring software will not consider items in dispute in the consider items in dispute in the credit score - giving false data to the lender.

10. DON’T LOSE CONTACT WITH YOUR MORTGAGE & REAL ESTATE PROFESSIONALS. If you have a question about whether or not you should take a specific action that you believe may affect your credit reportsor scores during the loan process, your mortgage or real estate professional may be able to supply you with the resources you need to avoid making mistakes that could drop your credit scores or possibly, cause you to lose the loan.

Where America's Money Is Moving!!!!

noreply@blogger.com (Suzy Keir) — Wed, 16 Jun 2010 18:56:00 +0000

Where America's Money Is Moving
Jon Bruner, Forbes.com
Jun 14th, 2010

Low taxes, warm sunshine and deep discounts on real estate. No wonder IRS data shows the wealthiest among us are headed south.
Surprise: America's wealthy like warm weather and low taxes. That's the takeaway from IRS data, analyzed by Forbes, on moves between counties. We looked for counties that the rich are moving to in big numbers.

Slide Show: Where America's Money Is Moving
Topping the list: Collier County, Fla., which includes the city of Naples. Tax returns accounting for 15,150 people showed moves to Collier County from other parts of the country in 2008, the latest year for which IRS data is available. Their average reported income: $76,161 per person--equivalent to $304,644 for a family of four. Although slightly more taxpayers moved out of Collier County than into it, the departing residents' average income came out to just $26,128 per person.

Households that moved to Collier County principally came from other parts of Florida, with Lee, Miami Dade, Broward, Palm Beach and Orange counties leading the list. Big northern cities also sent lots of migrants: Cook County, Ill. (home to Chicago); Oakland County, Mich. (near Detroit); and Suffolk County, N.Y. (on Long Island) each sent more than 100 people to Collier County during 2008.

In second place is Greene County, Ga., with a population of just 15,743 at the Census Bureau's last estimate. The IRS data show that in 2008, 788 people moved to the county, about 75 miles east of Atlanta.

Rounding out the top five: Nassau County, Fla., near Jacksonville; Llano County, Texas, 70 miles northwest of Austin; and Walton County, Fla., 80 miles east of Pensacola.

The dominance of the list by Florida and Texas--the former has eight of the top 20 counties, the latter four-- makes sense to Robert Shrum, manager of state affairs at the Tax Foundation in Washington, D.C., since neither state has an income tax. "If you're a high-income earner, then that, from a tax perspective, is going to be a driving decider if you're going to move to one of those two states," Shrum says.

After accounting for property taxes, Shrum's analysis shows that Texas has the fourth-lowest personal tax burden in the country, and Florida has the eighth lowest. Shrum also points to eight states that have targeted wealthy households with extra-high tax brackets: California, New Jersey, New York, Maryland, Hawaii, Oregon, Connecticut and Wisconsin. Six of the top 10 counties the rich are fleeing are located in those states.

Pitkin County, Colo., home to the pricey Aspen ski community, where home listings average more than $3.5 million, saw an exodus of rich people in 2008 as the economy began to contract. The 962 tax filers and dependents who left Pitkin had an average income of $71,473 per capita, while the equivalent figure for those moving to the county was $30,000 lower. Of those leaving Pitkin County, 224 moved to neighboring Garfield County where, according to real estate information service Trulia, homes list for 75% less than those in Pitkin County. IRS data also show movement from the resort area to cities like New York, Chicago and San Francisco.

Behind the Numbers
To find places the rich are moving, Forbes used IRS data on household moves broken down by county and income. We included counties where arriving households are richer than households that didn't move and departing households are poorer than households that didn't move. The final ranking orders counties by the difference in per-capita income between incoming households and those that didn't move.

Our ranking of places the rich are fleeing essentially reverses these criteria, looking for counties where departing households are wealthier than the population as a whole and where incoming households are poorer.

In order to find patterns among the wealthy, we restricted the lists to counties where departing or arriving households had per-capita incomes of $35,000 or more. That figure is equivalent to an annual income of $140,000 for a family of four--a very high income for any large subset of the American population (of 3,142 counties with IRS data, only 130 have average incomes above this level). And in order to avoid statistical anomalies, we only included counties with at least 500 people listed as arriving or departing.

This technique essentially finds new hot spots--places that aren't necessarily wealthy now but where wealthy people are moving. Some upscale places like Westchester County, N.Y., and Teton County, Wy., don't make the list because people moving into those counties aren't as rich as the people who already live there.

The IRS warns that these counts are only approximations; because they don't include households that don't file income tax returns, poor and elderly people are underrepresented. These counts also don't include returns filed after late-September 2009--a small fraction of total returns that tends to include some very rich people with complex returns who file for extensions.

Top 5 Places Where America's Money Is Moving
No. 1: Collier County, Fla.
Arriving average income per capita: $76,161
Departing average income per capita: $26,128
Stationary household average income per capita: $49,959
Total arriving people: 15,150
Total departing people: 16,802
Top origin: Lee County, Fla. (2,987 people)

No. 2: Greene County, Ga.
Arriving average income per capita: $56,414
Departing average income per capita: $25,432
Stationary household average income per capita: $30,875
Total arriving people: 788
Total departing people: 778
Top origin: Putnam County, Ga. (76 people)

No. 3: Nassau County, Fla.
Arriving average income per capita: $51,833
Departing average income per capita: $29,312
Stationary household average income per capita: $32,306
Total arriving people: 4,785
Total departing people: 3,690
Top origin: Duval County, Fla. (1,721 people)

No. 4: Llano County, Texas
Arriving average income per capita: $44,324
Departing average income per capita: $22,541
Stationary household average income per capita: $26,201
Total arriving people: 1,192
Total departing people: 1,018
Top origin: Burnet County, Texas (312 people)

No. 5: Walton County, Fla.
Arriving average income per capita: $45,591
Departing average income per capita: $28,360
Stationary household average income per capita: $30,553
Total arriving people: 3,939
Total departing people: 3,230
Top origin: Okaloosa County, Fla. (1,148 people)

New-home sales rise a record 27% in March

noreply@blogger.com (Suzy Keir) — Tue, 25 May 2010 19:11:00 +0000

Out of the 20 cities tracked by the index, 13 of them saw monthly declines in March, and Boston was flat. Eight also posted new index lows in March: Atlanta; Charlotte, N.C.; Chicago; Detroit; Las Vegas; New York; Portland, Ore.; and Tampa, Fla.

However, all but two of the cities also have shown improvement in their annual rates of return, with San Diego posting its 11th straight month of home price increases, amounting to a rise of 10.9% above the city's most recent low. Other cities with significant gains over recent lows include Los Angeles at 7.2%, Minneapolis at 7.4% and San Francisco at 16.2%.