Real Estate Sector: Good Things Amid the Bad

Published by nora | Filed under Buyer / Seller Tips, Communities, Market Trends, Mortgage / Finance, Real Estate

Optimists try to find rays of hope in bleak situations and refuse to be discouraged by negative developments. In the real estate sector, optimistic agents and brokers remain confident about their abilities and stay hopeful about sales despite setbacks. At the same time, they keep abreast about realities in the marketplace so they can adjust on time.

The U.S. real estate sector is still battered by foreclosures, high inventories, falling prices and low sales, according to the National Association of Realtors and other housing analysts. But many of these analysts are optimistic, citing developments they believe will bring back energy into the housing market soon, such as the following:

Law That Leads to More Accurate Home Appraisals   

The Home Valuation Code of Conduct, which has been largely blamed for low appraisals since its implementation, will be reviewed by the General Accountability Office as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Barack Obama in July.

Under the new law, home appraisers need to:

• be licensed or certified in the state where the property to be valuated is located
• visit the property in person, including the interiors of the property
• comply with the Uniform Standards of Professional Appraisal Practice and the Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989.
• follow rules on automated valuation models if these are used.

Drop in Mortgage Delinquency Rates

According to mortgage researcher Lender Processing Services, the number of non-current home loans dropped by 1.4 percent from June to 7.04 million loans in July. Compared to the 8.1 million non-current home loans in January, the drop rate in July was higher at 13.3 percent. Non-current loans refer to all loans in default by 30, 60, 90 days or more and those already in foreclosure.

Excluding loans in foreclosure, the total number of home loans delinquent by 30, 60, 90 days or more had a sharper drop, with a decrease rate of 2.8 percent over the month in July to a total of 5.02 million loans. The number of seriously delinquent loans – those in default by 90 days or more – dropped by 4.4 percent in July, for the first time going below the 2.5 million mark posted in August 2009.

Mortgage Rates at Historic Low Levels 

The average mortgage rate, according to bankrate.com, as of August 31 for 30-year fixed-rate loans is 4.35 percent, down over the week from 4.53 percent. Similarly, the average rage for 15-year fixed-rate is 3.85 percent, down from 3.96 percent in the previous week. The rates offered by certain banks are even lower.

Home Affordability  

The housing opportunity index is at near record high. This index, compiled by Wells Fargo and the National Association of Home Builders, tracks mortgage rates, house prices and what homes median-income families can afford to buy. Nowadays, 72.3 percent of median-income families can afford to buy the median-price home.

 

Top Mortgage Lenders in Customer Satisfaction

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Mortgage / Finance, Real Estate

If you’re planning to get a loan to buy a home, consider choosing from the mortgage lenders and servicers chosen by 4,516 homeowners interviewed by J.D. Power in its primary mortgage service satisfaction study conducted in May and June this year. These homeowners rated lenders according to how the lenders communicated and handled five items: loan origination fees, billing and payment process, escrow account, website and phone contact. The sixth factor considered was overall satisfaction.

The lender that got the highest rating was Branch Banking & Trust (BB&T), the tenth largest financial-holding company in the country with more than 1,800 branches in 12 states and in Washington, D.C. It got a rating of 795 points in a 1,000-point scale. According to the homeowners surveyed, BB&T was transparent about the fees it charged. The bank also used their preferred method of billing and payment and currently provides an easy way for homeowners to access their account information.

In another survey conducted by global financial services research firm Greenwich Associates in 2009, BB&T also won all the middle market and small business banking award categories. The second best mortgage lender and servicer in the J.D. Power survey was SunTrust Mortgage, among the country’s largest banks with 1,675 branches. It got a rating of 767 points. Third in the survey was U.S. Bank with a rating of 755 points. This bank is the nation’s fifth largest commercial bank with 3,002 branches in 24 states.

Among the four largest banks in the country, namely Wells Fargo, JPMorgan Chase, Bank of America and Citigroup, it was Wells Fargo which got the highest rating of 744 points. It was fourth in ranking in the survey. CitiMortgage was ninth with 730 points, Chase was 13th with 721 points and Bank of America was 16th with 705 points.

To summarize, these are the top 15 mortgage lenders in customer satisfaction, according to the 4,516 homeowners surveyed in May and June this year:

1.     BB&T
2.     SunTrust Mortgage
3.     U.S. Bank
4.     Wells Fargo
5.     Fifth Third Mortgage
6.     Regions Mortgage
7.     PHH Mortgage
8.     MetLife Home Loans
9.     CitiMortgage
10.     Flagstar Bank
11.     GMAC
12.     HSBC Mortgage
13.     Chase (JPMorgan)
14.     PNC/National City Mortgage
15.     Bank of America

According to J.D. Power analysts, mortgage lenders deliver on best practices during the loan origination process, but fail during the loan modification process, particularly on the length of time spent to deliver a certain response and on the number and frequency of documents and information needed for processing.

In the most recent report released by the U.S. Treasury, the top banks in number of loan modification under the Home Affordable Modification Program and the bank’s proprietary programs through July were expectedly Bank of America, JPMorgan, Wells Fargo and CitiMortgage as these banks control more than half of all home loans originated nationwide.

Existing Condo Sales in Florida Surged in July

Published by nora | Filed under Buyer / Seller Tips, Communities, Market Trends, Real Estate

Sales of pre-owned condos in Florida increased by 11 percent in July to a total of 5,557 units, compared to the 4,991 condos sold in July last year, based on data from Florida Realtors. Additionally, 11 metro areas in Florida posted increases in their existing condo sales in July. These were the 11 areas including their rates of increase:

• Orlando,  59 percent
• Jacksonville,  44 percent
• Miami,  43 percent
• Daytona Beach,  38 percent
• Fort Pierce-Port St. Lucie,  29 percent
• Ocala,  25 percent
• Punta Gorda,  23 percent
• West Palm Beach-Boca Raton,  16 percent
• Lakeland-Winter Haven,  10 percent
• Tampa-St. Petersburg-Clearwater,  4 percent
• Melbourne-Palm Bay,  2 percent

Buyers looking for bargain-priced condos can find a lot of units in Florida, as the sales price median for all pre-owned condos sold in July across the state was $87,200, down by 19.6 percent from $108,500 median price for units sold in July last year. The median price was also lower by 52 percent than the $181,300 nationwide median for existing condos in June, based on data from the National Association of Realtors.

For the seven-month period from January to July, the increase in condo sales in 2010 was even more significant, as total sales increased by a whopping 45 percent from 29,885 condo units last year to 43,438 units this year. The median price was still lower though at $96,100, down by 13 percent from the $110,300 median in the January-July period last year.

In contrast to the good news about condo sales, sales of existing single-family homes statewide decreased in July by 14 percent, from 15,762 units in July last year to 13,589 units in July this year. The median price for all single-family homes sold also decreased from $147,600 in July last year to $138,000 this year, a drop rate of seven percent.

The good news about single-family home sales is that the total sales for the seven-month period from January to July this year increased by 15 percent from 90,320 units last year to 103,977 units this year. The drop rate in median price was also lower than the drop rate in July as the median price for the seven-month period was only four percent. The metro areas with the least rates of single-family sales decreases were:

• Orlando,  -3 percent
• Jacksonville,  -5 percent
• Fort Walton Beach,  -7 percent
• West Palm Beach-Boca Raton,  -7 percent
• Miami,  -8 percent
• Fort Pierce-Port St. Lucie,  -9 percent

According to analysts, the major causes of declines in single-family sales were the expiration of the homebuyer tax credits, the high unemployment rate, and the explosion of the Deepwater Horizon drilling rig which resulted in an oil spill that downed the operations of local businesses, including real estate sales in Florida and other Gulf Coast states. Housing analysts said that the special allocation of $16 million for real estate professionals affected by the oil spill will help facilitate economic recovery in the state.

Free Foreclosure Help from New Websites of Fannie Mae and Hope Now

Published by nora | Filed under Buyer / Seller Tips, Miscellaneous, Mortgage / Finance, Real Estate

Here are better websites for you if you’re looking for foreclosure help. These sites are different from others as they offer a lot of options and they’re not run by private financial or foreclosure consultants who usually shape their advice to persuade you to obtain their paid services.

KnowYourOptions.com

This is a new site launched this month by Fannie Mae, a government-sponsored enterprise that buys home mortgages made by lenders, helping ensure that lenders always have funds to lend to borrowers at affordable rates. It does not give loans directly to borrowers, but it helps provide funds for lending.

One the unique features of this site is a section of videos of homeowners relating their stories of how they saved their homes, along with videos of counselors talking about how they can help distressed borrowers. On the home page of this site, you can immediately see links to various options that you can consider, such as short sale, deed-in-lieu, repayment plan, forbearance, modification or deed for lease. There’s also a self-guided options finder, which enables you to decide which options are best for you just by answering questions one at a time.

Other helpful resources available at the site are a financial checklist, a Fannie Mae loan lookup, a credit score guide and calculators for forbearance, refinance, repayment, modification, loan-to-value, and debt-to-income estimation.

Hope LoanPort at hopeloanportal.org   

On this website, free housing counselors use the trademarked LoanPort system to help you gather required documents for the Home Affordable Modification Program, upload your complete application directly to loan servicers, and monitor the status of your HAMP application.

The first ten mortgage servicers that have agreed to use the Hope LoanPort system were Chase, City, GMAC, American Home Mortgage Servicing, Bayview Loan Servicing, Ocwen Loan Servicing, PNC Mortgage, OneWest, SunTrust Mortgage and Saxon Mortgage Services. Bank of America, the largest mortgage servicer in the U.S. with one BofA mortgage in every five mortgages, has joined the LoanPort network in June.

The LoanPort system was developed by the Hope Now Alliance, an alliance of 21 large non-profit counseling organizations, 37 large mortgage lenders, three trade associations, five mortgage insurance companies, two mortgage market organizations and the two government-sponsored enterprises Fannie Mae and Freddie Mac.

Mymoney.gov

This website is different from all the other personal finance websites as it is run by 20 U.S. federal agencies and bureaus. It offers information on almost anything about managing your money and handling life events such as birth, adoption, college, job loss, retirement and death of a family member. It provides checklists and worksheets, including downloads for quick reference.

Knowyouroptions.com and Mymoney.gov have versions in Spanish while hopeloanportal.org can be translated to several languages through the Google translator.

Know Your Rights as a Mortgage Applicant

Published by nora | Filed under Buyer / Seller Tips, Mortgage / Finance, Real Estate, Shout Outs

You can’t be discriminated against when you apply for a mortgage. Your lender can’t ask your religion or can’t ask if you’re pregnant. Your mortgage application should be approved or rejected based only on your financial and employment records.

There are at least three federal laws that were designed to protect you against mortgage discrimination. In addition, there are federal agencies that ensure you’re protected from discrimination and that will help resolve discrimination cases.

The Equal Credit Opportunity Act (ECOA)

The ECOA prohibits credit discrimination based on color of skin, race, religion, sex, age, country of origin, marital status, or on the fact one is handicapped, receiving public financial assistance, pregnant, or has children aged below 18. Under this law, your lender is not allowed to do the following:

• Impose different terms, such as higher loan fees or higher interest rates, based on your national origin, race, sex, religion, color of skin, age, marital status or whether you’re on welfare.  Your lender, however, may ask things such as your immigration status to ascertain whether you have the right to stay in the U.S. to be able to pay your loan.
• Ask if you’re divorced or widowed. Your lender can ask only whether you’re married, unmarried, or separated.
• Ask about your spouse or marital status if you’re applying for a separate loan account.
• Ask if you’re planning to have children. Your lender however can ask about your expenses allocated to dependents.
• Ask if you’re receiving child support, alimony, or separate maintenance payments.

The Fair Housing Act (FHA)  

The FHA prohibits discrimination in all residential real estate processes and transactions such as:

• home loan application and underwriting for buying, building, repairing or improving a home
• appraisal, brokerage or sale of residential real estate
• house sale or rental

The Fair Credit Reporting Act (FCRA)

Under the FCRA, each of the three credit reporting agencies – Experian, Equifax and Transunion – is required to send you a free copy of your credit report once every 12 months if you request it. You just need to file your request at annualcreditreport.com or through phone number 1-877-322-8228. You can also visit ftc.gov/credit, print the request form, and send it to Annual Credit Report Request Service.

What to Do If Your Home Loan Application Is Denied

You have the right to know the specific reason why your loan application is rejected. Your bank cannot just say you failed to meet mortgage application standards; it must be able to tell you why you didn’t meet the standards, such as your earnings are far below the minimum income requirement.

If your loan is rejected because of low appraisal, review the appraisal, and check if the appraiser committed an error or overlooked something. If the reason is your credit report, ask your lender the specific negative information on your report so you can file a dispute with the credit reporting agency and the company that provided the information.

If you believe you’ve been discriminated against, file a complaint with the lender, or ask help from the Federal Trade Commission or the Housing and Urban Development’s Office of Fair Housing and Equal Opportunity.

Cheaper Home Loans from Smaller Banks and Credit Unions

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Mortgage / Finance, Real Estate, Shout Outs

Home loans are now cheaper, as mortgage rates continue to fall. According to Freddie Mac, the 4.44-percent average rate for fixed-rate 30-year mortgages on August 12 was the lowest rate recorded by Freddie Mac since it started monitoring mortgage rates in 1970. The rate also marked a sharp plunge from 5.07 percent in January.

But you can find even cheaper home loans from smaller banks, regional banks and credit unions. As examples, Heartland Bank in St. Louis is offering a mortgage rate of 4.5 percent, Rockland Trust in Boston is offering 4.13 percent and Acacia Federal Savings Bank is offering 4.25 percent. You can get these low rates without paying for the so-called points that lower rates. You can visit financial websites like Bankrate.com and Lendingtree to check local banks offering the lowest rates.

Analysts say that smaller banks are offering lower rates in order to capture a higher share of the mortgage market. Big banks like Bank of America, Wells Fargo and JPMorgan Chase are already enjoying a huge portion of the market, so they’re not pressured to lower their rates to attract borrowers. These three banks captured 56.5 percent of all new mortgages made in the first half of 2010, a high jump from 36.6 percent in 2007. The average mortgage rate they’re offering in the second week of August for fixed 30-year mortgages was 4.66 percent.

There are other factors why smaller banks can offer lower mortgage rates. One is the built-in advantage of their size. Since they’re small, they can cut overhead costs more quickly and convert cost savings into lower rates. They also accept lower profit margins in order to increase loan volumes. In the first quarter of this year, profits from mortgage loans originated by independent mortgage lenders decreased to $606, down from $1,808 in the first quarter last year, according to the Mortgage Bankers Association.

Another factor is compensation for loan officers. Smaller banks tend to pay loan officers on commission while the big banks pay them salaries regardless of loan volume. With lower wage costs related to mortgages, regional banks have more flexibility in reducing loan rates.

The credit union that has been topping all others in extending home loans to its members is the Navy Federal Credit Union. It has committed $7 billion in new mortgages and refinancing to members in 2010, higher than the $6.2 billion mortgages it made in 2009. As of August 16, its rate for 30-year conforming loans is 4.25 percent for applications with discount points of 1.25, and 4.375 percent for applications with a 0.25 discount point.

Since credit unions are non-profit and have the mandate to serve their members, most of them offer lower loan origination fees, loan rate lock options and biweekly payment plans. They have no prepayment penalties, no underwriting fees and no private mortgage insurance for most conventional home loans.

Delinquency Rate for Home Loans Slows Down

Published by nora | Filed under Buyer / Seller Tips, Communities, Market Trends, Mortgage / Finance, Real Estate

The drop in the national default rate for home loans in the second quarter is one sign that the housing sector is starting to stabilize. According to credit bureau TransUnion, which analyzes quarterly mortgage, credit card and auto loan data in about 27 million credit files or 10 percent of active consumer files in the U.S., the percentage of home loans delinquent by two months or more in the second quarter dropped to 6.67 percent, a decrease of 1.48 percent from the default rate of 6.77 percent in the first quarter.

The default rate in the first quarter also marked a decrease from the prior quarter, and it was even more substantial as the percent of decrease was 18.52 percent. However, the default rate in the second quarter was still higher than the rate in the same quarter in 2009, which was 5.81 percent.

What is even more encouraging is the drop in the rate of home loans defaulting by 90 days or more or by 120 days or more for the first time since 2007, the year the recession started. TransUnion said that 64 percent of all large metro areas in the U.S. posted a drop in home loans delinquent by 90 days, marking a substantial increase from 45 percent of large metro areas in the previous quarter. Similarly, the percentage of large metro areas posting a drop in home loans in default by 120 days almost doubled from the previous quarter.

The average mortgage debt nationwide also decreased in the second quarter, with the average home loan per borrower dropping to $191,284 from $192,774 in the previous quarter and from $193,811 in the same quarter in 2009. Areas with the highest average mortgage debt per borrower were:

• Washington, D.C. at $366,627
• California at $345,502
• Hawaii at $311,130

The state with the lowest average mortgage debt was West Virginia at $99,206. States which showed the biggest percentage drop in average mortgage debt were:

• Nevada at 31.2 percent
• Arizona at 3 percent
• Florida at 1.8 percent

Along with the drop in the national default rate and average mortgage debt was the drop in the origination of home loans nationwide by 50 percent. Idaho and Wisconsin posted the sharpest drops, which were 58.7 percent and 58.6 percent, respectively.

Default rates continued to be highest in the states of Nevada, with a delinquency rate of 15.86 percent, and Florida with 15.02 percent. North Dakota, South Dakota and Nebraska posted the lowest default rates of 1.61 percent, 2.23 percent, and 2.61 percent, respectively.

TransUnion analysts expect delinquency rates for home loans to continue dropping for the rest of the year, as the employment situation and real estate values improve. They expect the national default rate to drop to 6.4 percent towards the end of the year.

More Homeowners Mean More Stable Communities

Published by nora | Filed under Buyer / Seller Tips, Communities, Market Trends, Miscellaneous, Real Estate

If you’re buying a home, you’re not only giving your family a more comfortable and stable life, you’re also contributing to the stability of your community.

Studies cited by the National Association of Realtors in its latest report on homeownership found that homeownership results in the stability of families and communities. Compared to renters, homeowners:

• Are more active in community activities
• Have higher levels of self-esteem
• Experience higher levels of happiness
• Are able to take advantage of education opportunities
• Develop social ties that allows them to access opportunities not available if they are    frequently moving
• Feel comfortable and secure as they build their lives together with their children in  familiar surroundings

Why are these so? All studies carried out by business, government and academic organizations on the relationship of homeownership and community stability point to the embedding of homeowners in communities. For instance, homeowners are more likely to participate in local elections and public meetings compared to renters. They also are more likely to join voluntary associations, fundraising drives and faith organizations.

The studies also found that the percentage of teenagers who stay in school is higher for families that own their homes compared to families that rent. Children’s academic achievements are also enhanced if families do not frequently move. Additionally, neighborhoods with high percentages of homeowners have stronger clout and thereby have the ability to demand better educational facilities and resources.

Homeowners also spend time and money to maintain and improve their homes. With residential properties always in good condition, property values are maintained and overall community quality is preserved.

Levels of crime are also reduced in neighborhoods full of homeowners. In these communities, neighbors know each other and are more likely to recognize perpetrators. Homeowners are also more willing to volunteer for crime prevention programs. In areas dominated by renters, the level of volunteering or community participation is low as people are hindered by the thought that they will soon move again.

Based on data from the U.S. Census Bureau, the homeownership rate nationwide in the second quarter of 2010 was 66.9 percent, the same as the rate in the last quarter of 1999. Since the second quarter of 2004 when the national rate reached its peak of 69.2 percent, the rate has been dropping.

The state with the highest homeownership rate in the second quarter was West Virginia, with 78.7 percent. In the first quarter of 2005, West Virginia also topped other states in homeownership rate, with 82.4 percent. The states that rounded up the top five were South Carolina, New Hampshire, Michigan and Delaware.

At the bottom of the chart was Washington, D.C., with 44.7 percent, the lowest homeownership rate. New York State, Hawaii, California, Nevada and Rhode Island rounded up the five states with the lowest homeownership rates during the quarter.

Among the largest metro areas in the country, Akron, Ohio had the highest rate of homeownership, with a rate of 80.6 percent. Columbia in South Carolina, Grand Rapids in Michigan and Birmingham in Alabama rounded up the top four in homeownership.

Nearly 93,000 Bank Owned Homes Added to Lists in July

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Real Estate

A total of 92,858 residential units across the U.S. became bank owned homes in July, according to the latest report released by RealtyTrac. The total marked an increase of 9 percent over the month and a rise of 6 percent over the year.

Data from the report showed that mortgage lenders slowed down on filing new foreclosure actions, and instead stepped up the foreclosure of homes that have been in the foreclosure queue for a long time.

While the number of bank repossessions increased in July both over the year and over the month, the number of default notices decreased sharply by 28 percent over the year and dropped by 32 percent from the highest total which was reached in April last year. Notices of foreclosure auctions also decreased by two percent over the year and fell by 14 percent from the highest total which was reached in March this year. Over the month, the number of default notices and foreclosure sale notices increased, but the rates were low at one percent and two percent, respectively.

Altogether, the total number of U.S. homes that received default or foreclosure notices in July was 325,229, a number still higher than the previous month’s total, although it was an improvement from the total in July last year. The month-over-month increase was almost 4 percent and the year-over-year decrease was almost 10 percent. According to the research firm, July was the 17th month in a row that foreclosure filings surpassed the 300,000 threshold. It was also the eighth straight month that the number of bank owned homes increased over the year. The good news was that it was the sixth consecutive month that the number of default notices dropped on a year-over-year basis.    

Despite a dramatic plunge rate of 38.11 percent over the year, California continued to top all other states in foreclosure filings, posting a total of 66,910 and comprising 21 percent of all filings nationwide in July. Florida was second with a total of 51,557 filings, comprising 16 percent of all filings in the country, despite a decrease rate of 8.73 percent.

Similarly, Nevada was still the leading state in terms of foreclosure rate, with one foreclosure filing for every 82 homes in the state. Arizona was second in foreclosure rate, but its rate of one in 167 was far lower than that of Nevada. All the four states leading in foreclosure rates posted significant decreases in filings year-over-year in July, but these improvements were wiped out by increases over the month, except in the case of California whose filings also dropped over the month.

In the ten metro areas with the highest rates of foreclosure, filings also decreased over the year, but five of them posted substantial month-over-month increases, including the Cape Coral-Fort Myers and Phoenix-Mesa areas.

As shown in all foreclosure sales, although bank owned homes mean losses for homeowners, they mean golden opportunities for home ownership and investment for other people.

Ten-Month Supply of Homes for Sale in the Tampa Bay Area

Published by nora | Filed under Buyer / Seller Tips, Communities, Market Trends, Pinellas County Homes, Real Estate

It’s still a buyer’s market in the Tampa Bay area, as there’s still a ten-month supply of homes for sale in the region as of July.

Based on a recent report from Home Encounter LLC, new listings were being added, but home sales were slowing, so the inventory of homes for sale in the Tampa area has been rising. In July, new listings increased by 2.5 percent to a total of 4,626 homes and increased the total of homes in the market to a ten-month supply from nine months in July last year and from seven months in the previous month of June.

Housing analysts said that based on observations over the years, a six-month supply of homes is the supply level that balances out supply and demand. The number of months of supply indicates the number of months that all homes in the market are sold off at the existing pace of home sales. Nonetheless, the number of days that homes stayed on the market in the Tampa Bay area dropped in July by almost six percent to 216 days, down from 229 days in July last year.

Home Encounter said that home sales typically increase during the months of June and July, but sales during these months in 2010 were disappointing, as they plunged by a staggering 19.6 percent from total home sales in June and July last year. Housing market participants were even more disappointed as they hoped the price drop of more than five percent over the year would help push up home sales, but they didn’t.

In the Tampa Bay counties of Pinellas, Hillsborough and Pasco, home sales in July dropped by 19.6 percent over the year to a total of 2,396 units, which also marked a sharp plunge of over 30 percent from the previous month. The average price for homes sold was $93 per square foot, down by five percent on a year-over-year basis. The average price discount obtained by buyers was 4.6 percent, down by 40 percent over the year, but up by 21 percent compared to June.

The report from Home Encounter also showed that foreclosure sales and short sales still made up a significant portion of home sales in July. They’re still pushing down prices, as they’re still sold at prices up to 50 percent cheaper than comparable new homes. In Polk County, foreclosed homes and distressed homes accounted for 49 percent of all homes sold in July, an increase of four percent from the previous month. Short sale homes accounted for 22 percent while bank-owned homes accounted for 28 percent.

Short sale homes were selling for $80.66 per square foot, or 76 percent of normal sales prices, while bank-owned homes were selling for $53.64 per square foot, or 50 percent of normal sales prices.

Four Costliest Mistakes by First-Time Homebuyers

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Mortgage / Finance, Real Estate

Are you considering buying your first home? Then take a look at the costliest and most common mistakes committed by first-time homebuyers so you can take steps to avoid them.

1. Not Knowing Your Budget for a Home

If you’re shopping for a home without first estimating what you can afford to pay, you could be wasting your time looking at homes priced beyond what you can really pay. Worse, you could fall desperately in love with a home and make desperate measures to buy it and then regret later when almost all your money is being funneled to your mortgage payment.

List all your monthly expenses, including your student loan payments, auto loan payments, fuel and related costs, credit card payments, health insurance, food, insurance premiums and retirement fund payments. Total these expenses and then subtract the total from your net monthly pay. The difference would give you an estimate of how much you can spend for your mortgage payments.

2. Not Getting a Lender Pre-Approval

You’ve made calculations and ascertained that you have enough for monthly mortgage payments, but your bank may not look at it in the same way. To avoid wasting money and frustrating yourself, your real estate agent, your seller and other people, get first a pre-approval from your bank. Pre-approval will ensure that your bank will lend the amount you need at terms acceptable to you.

Remember also that pre-approval is not the same as pre-qualification, which is typically issued by a loan officer after interviewing you. A pre-approval gets more credence as it’s given by an underwriter after verifying your down payment, credit, employment and other financial activities. Be also aware that many lenders check again your credit score just before closing, so you should not do anything that could lower your score, such as skipping your personal loan payment or financing a new car, before your closing date.

3. Not Preparing for Other Home Ownership Expenses

In addition to your monthly mortgage payments, there are also other costs you need to pay as a homeowner. These are residential property taxes, repair costs, and premiums for home insurance you need to have to cover your loss in case of disaster. If your housing unit is a condo, you need to pay monthly homeowner association fees to cover the maintenance of common areas, the security of the whole building and other services for unit owners.

4. Not Knowing Which Aspects Are Most Important to You

Is location more important to you than number of bedrooms? Make your wish list for a home and then rank the items according to how they’re important to you. If you’ve been extremely miserable before as a renter because you share the same walls with your neighbors, then condo is not an option. If you have a definite picture of what you want and need, you’ll be able to make your best choice despite making compromises on some aspects.

By being aware of these things, you can prepare yourself and avoid making costly mistakes.

Third Quarter Outlook for Home Loans

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Mortgage / Finance, Real Estate

As you’re looking for your dream home, it helps if you also look at the outlook by a group of mortgage professionals for home loans for the third quarter.

No definite trend for mortgage rates

Mortgage specialists now hesitate to make predictions about where mortgage rates are going for this quarter, as their prediction for the second quarter was wrong. They projected that mortgage rates will increase in the months following April when the Federal Reserve decided to stop buying mortgage-backed securities, but instead, mortgage rates dropped dramatically to record low levels in May and in June.

In July, instead of rebounding, rates remained at low levels, going against the prediction of steadily increasing rates. Mortgage analysts said that rates remained low because the expected economic rebound did not happen, with the national unemployment in June still high at 9.5 percent.

Jumbo home loans now offered by more lenders

More big banks now are offering jumbo home loans with relaxed standards. While before, lenders required down payments of not less than 25 percent, they now accept 20-percent down payments. Also, they now offer fixed-rate loans. Over the past two years, most lenders were offering only jumbo loans at adjustable-rate modes. In addition, rates for fixed jumbos have dropped from their higher levels in the past several months.

Stricter requirements for FHA home loans

Because the Federal Housing Administration found that the pace of foreclosures among home buyers who got substantial concessions from sellers was significantly higher than among borrowers with less concessions, it decided to lower the maximum concession rate to three percent from the previous rate of six percent. The FHA also decided to increase its minimum down payment requirement to ten percent for borrowers with FICO credit scores ranging from 500 to 579. It will continue to offer the minimum 3.5 percent down payment privilege, but only to borrowers with scores of 580 and above.

Loan Refinancing Still Not Viable for Many

Despite record low mortgage rates, a huge number of distressed homeowners are not able to refinance their high-rate mortgages because of their low equity or lack of equity. In the first quarter, the average rate for outstanding mortgages was 5.98 percent, based on Bureau of Economic Analysis reports. These mortgages are being pushed for refinancing so borrowers can take advantage of the record low rates, such as 4.75 percent for most of July, but most applications are being rejected because borrowers don’t have equity. The drastic plunge in home prices has put the values of their homes far lower than their outstanding home loans.

For prospective home buyers, the trends that are helpful are the availability of jumbo home loans and record low mortgage rates. In addition, private lending is expected to rise if FHA lending slows down.

FHA Loans – Proposed Changes that Affect Home Buyers

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Mortgage / Finance, Real Estate

Home buyers now need to improve their financial situation and their credit scores before pursuing their home purchase plans, as the U.S. Housing and Urban Development Department has proposed three policy changes for home loans backed by the Federal Housing Administration.

In the middle of July, the HUD released a notice soliciting public comment for a period of 30 days on the changes, which are intended to help the FHA reduce its risk and sustain its ability to help families achieve their homeownership dreams through affordable loans.

The three proposed policy changes are the following:

    1. Reduction of Seller Concessions from 6 to 3 Percent

Seller concessions are amounts of money that sellers contribute to help cut down buyers’ costs. These can be payments for home inspections or appraisals or can be portions of the total closing costs. They can also include free upgrades.

Because the FHA has determined that bigger seller concessions mean higher home prices and higher default rates, it has decided to lower the allowable percentage to three percent of the home sales price, which is closer to industry standards.

      2. Higher FICO Credit Score Requirements

Borrowers applying for FHA loans are now required to have a FICO score not lower than 580 in order to qualify for the low down payment requirement of only 3.5 percent. Those with credit scores that range from 500 to 579 will have to make a down payment of ten percent or higher. Prospective borrowers with FICO scores lower than 500 are no longer qualified for FHA loans.

The FHA has found that as of the first month this year, the default rate for borrowers with FICO scores lower than 580 is three times the rate for borrowers with scores higher than 580. By tightening credit score requirements, the FHA hopes to cut down its default rate significantly. Nonetheless, before the release of the FHA proposals, many lenders have already been approving only home loan applications from borrowers with scores of 580 or higher. Records show that only one percent of owners of FHA-backed single-family homes have FICO scores lower than 580.

     3. Tighter standards for home loan underwriting

When underwriting, mortgage lenders are now strictly required to use factors which can best predict the performance of home loans, such as loan-to-value ratio, cash reserves and loan applicant’s credit history. The financial activities of borrowers with FICO scores lower than 620 would be more thoroughly scrutinized and the overall debts of borrowers, including their home loans, should not be more than 43 percent of their monthly incomes.

As the volume of FHA loans shot up from only 3 percent of all single-family mortgages nationwide in 2006 to about 30 percent in 2009, the default rate spiked. To sustain its operations, the FHA needed to implement the changes described above.

Nearly 28,000 Vacant Lots in Tampa Bay for Home Builders

Published by nora | Filed under Buyer / Seller Tips, Communities, Miscellaneous, Pinellas County Homes, Real Estate

Home builders and other investors with plenty of cash reserves have the opportunity of a lifetime to buy lower-priced vacant home lots in bulk in Tampa Bay, as there are 27,923 vacant home sites in the five counties that make up the Tampa Bay area – Pinellas, Hernando, Hillsborough, Citrus and Pasco.

Based on a report from research firm Metrostudy, the nearly 28,000 vacant lots in Tampa Bay include multifamily sites ready for residential construction, and it would take builders at least nine years to build homes on these sites at current home building rate. This total number doesn’t even include large areas of lands reserved for new subdivisions. Indeed, there are plenty of residential sites available for residential development.

For home builders with lots of cash, these lots in good locations are gold mines, as they can be acquired at bargain prices and then developed and sold at high profits in the coming years.

Hillsborough County has the highest number of vacant single-family home lots – a total of 9,594, which would last for nearly five years at current home building pace. Next is Pasco, which has 6,011 lots that would last for six-and-a-half years. Third is Hernando, which has 3,969 lots that would last for a staggering 45.5 years. Pinellas is fourth with 764 lots that would last for 14 years.

According to housing analysts, the Tampa Bay area is a healthy housing market for home builders if it has a supply of vacant construction-ready home lots equivalent to around 24 months of supply. Only 896 homes were built in the area in the April to June quarter, but nonetheless, it was the best number for the home building sector since the third quarter in 2008 when there were 934 homes built.

In 2009, only 3,090 homes were built in the Tampa Bay area, far below the rate of 8,000 to 10,000 units per year during good times. Home builders that bought their home lots at bargain prices and have sold the homes they built on the lots are among the more successful builders during the downturn.

Nationwide, based on reports from the U.S. Commerce Department, new home sales in June spiked by almost 24 percent compared to the previous month to a seasonally revised annual sales of 330,000, but even so, the sales rate was the second slowest sales pace since 1963. The annual sales pace of 267,000 in the previous month was the slowest pace on record.

To keep their operations running, home builders have been tackling projects besides building single-family homes. According to the National Association of Home Builders, 45 percent of its 31,630 members that specialize in single-family house construction did residential remodeling last year and 15 percent pursued land development. Those with extra funds took advantage of low prices by buying vacant lots for future development.

Qualify for a Home Loan Through Credit Rescoring

Published by nora | Filed under Buyer / Seller Tips, Miscellaneous, Mortgage / Finance, Real Estate, Shout Outs

If your credit score on the FICO scale is 599 or below, your application for a home loan won’t be accepted by most lenders, as even those with scores between 599 and 700 are having a hard time getting their applications considered by major lenders.

But take heart because you’re not alone. Over the past two years, the credit scores of millions of American consumers have declined because of the recession. Fair Isaac Corp., the firm that developed the FICO score, says that around 43 million Americans or about one-fourth of all consumers with active credit records, have FICO credit scores of 599 or lower.

On the FICO scale, which runs from 300 to 850, a score of 599 is considered risky by lenders. Since the start of the housing meltdown, mortgage lenders have been accepting only the home loan applications of borrowers with FICO scores higher than 700. Even government enterprise Fannie Mae offers its best rates only to those with FICO scores of 740 or higher.

Is there something you can do to improve your FICO credit score? Yes, there is, and it’s called credit rescoring – a legitimate way to lift your score as long as it’s done by independent credit reporting firms that use procedures acceptable to the three major credit bureaus, namely Experian, Equifax and TransUnion. They’re also typically members of the National Credit Reporting Association.

When looking for a company to increase your score, be aware that there are a lot of enterprises on the Internet that promise dramatic repairs overnight, but which are actually just providers of lists of steps for credit improvement, or worse, run by people using all kinds of illegal means to grab money from others.

A reliable credit reporting firm can perform a legitimate credit rescoring by finding omissions in your file or errors that are dragging your scores down. After these errors are identified, the credit reporting firm notifies your creditors and the three national credit bureaus so that the errors can be fixed and your scores increased. There are also steps that your credit rescorer will advise you to do, such as reducing your usage of a certain credit account to boost your score.

According to credit reporting firm Credit Communications, the typical cost for credit rescoring ranges from $90 to $200, depending on the number of credit accounts to be fixed. Credit rescorers also need about three to five days to complete a rescoring. The firm also said that credit scores are increased by 25 to 32 points on the average, although there are borrowers whose credit scores have been boosted dramatically.

So if your credit score doesn’t qualify for a mortgage, don’t give up easily on your dream of buying a home. There could be errors in your credit files which can be fixed by credit rescoring.