Research rates online or by calling local lenders. Use calculators at Bankrate.com to determine whether you should refinance and how long it will take to get back the money you spend on the process. Talk to your current lender, which might be able to use title work from a previous refinancing to save you money.
]]> "You can call around, talk to real estate professionals to determine if the lender is reliable and has been in business long enough," Neidus said. "If they're reliable, they're not going to jack up the costs."• If you're worried about getting approved, consider adjustable-rate loans, which can be more flexible. Or consider the federal Home Affordable Refinance Program, for homeowners with Freddie Mac or Fannie Mae loans. The program, which will see some revisions in early 2012, can help people who owe more than their homes are worth.
• Don't try to predict where rates will head. Some lenders say rates will rise and fall with the stock market. And rates may be higher during the holidays and on weekends. But, generally, you'll have to rely on your research, and your lender's expertise.
]]>Record-low mortgage rates sparked a refinancing boom that started more than a year ago and stretched through 2011. Requests to refinance surged in early December, as mortgage-interest rates dipped below 4 percent for a 30-year, fixed-rated loan, according to weekly data from the Mortgage Bankers Association.
]]> If you're toying with when to apply -- and whether it's worth the effort -- here's some bad news: There's no simple answer or rule of thumb."It's all math," said Jeffrey Steed of Schmidt Mortgage Co. in Rocky River. "It's all going to be your individual situation, to just look at that math. But I think you start with 'How long do I intend to be there?' and you go from there."
The good news: Economists expect rates to skate along at low levels, so there's no need to rush. You have time to evaluate the worth of your home, consider the costs and shop for the best deal.
Before you jump on the refinancing bandwagon, here are some things to consider:
•It doesn't matter how low rates go. If you don't have a job or your credit history is tarnished, you'll struggle to get a loan. Check your credit score several months before trying to refinance, and clear up any inaccuracies on your report. Local mortgage brokers say applicants should show at least two years of steady employment.
"If you were laid off for six months in the past two years, and you were lucky enough to get another job, well, I'm glad you got another job," Steed said. "But it's going to be a problem."
•Lower your expectations. After years of home-price declines, your house probably isn't worth as much as you think it is. Before jumping into refinancing and paying for an appraisal, check out websites like Zillow.com, find out what nearby homes have fetched recently, and talk to real estate agents who are familiar with your neighborhood.
"A good lender will tell the buyer to spend some time doing research on their own," said Andy Neidus, branch manager at American Midwest Mortgage Corp. in Mayfield Heights.
• Fix up your home and collect records on any improvements you've made since your last appraisal. Consider how long you plan to stay in the house. If it's just a couple of years, you might not recoup the closing costs. So refinancing might not be worthwhile.
If you plan to live there long-term, consider options ranging from reducing your rate to changing your loan term -- to cut it back from a 30-year to a 15-year mortgage, for example. And run the numbers to see whether you'd be better off making a few extra monthly payments, to eliminate the loan faster, instead of refinancing.
• Research rates online or by calling local lenders. Use calculators at Bankrate.com to determine whether you should refinance and how long it will take to get back the money you spend on the process. Talk to your current lender, which might be able to use title work from a previous refinancing to save you money.
"You can call around, talk to real estate professionals to determine if the lender is reliable and has been in business long enough," Neidus said. "If they're reliable, they're not going to jack up the costs."
]]>Q. I went to a lender to refinance my mortgage and was turned down. They said my credit score was about 30 points too low. What can I do to fix my credit score so I can refinance while rates are low?
A. There are many reasons why your credit score might be lower than it should be.
A big reason is delinquent accounts. If you have any late payments, collection accounts, tax liens, or judgments, it can reduce your credit score by hundreds of points.
]]> Also, having new or young credit can decrease the average age of your accounts. Since being in the credit game a long time increases your score, it is best to have very old credit.If you have a relative or friend with old credit you can be added to their account as an authorized user. You will not be responsible for the debt owed, but within six months the account will show up on your credit as an old account and can boost the score.
Although this type of credit is not considered primary when applying for a loan, it will increase your FICO score.
Revolving credit, if not used carefully, can also ruin your credit score. Types of revolving credit include credit cards, overdraft on checking accounts and lines of credit.
You must review what your balance to limit ratios are. If the aggregate balances are over 7% of your total limits, your score will begin to drop. The closer the balance inches up to the limit, the more the score drops.
For example, if you have five credit cards, each having a $1,000 limit, you would have total limits of $5,000. If you had an aggregate balance of $4,500, your score could plummet, because your balance-to-limit ratio would be 90%.
One way of increasing your score is making sure your balance-to-limit ratio on revolving credit is no more than 7%. Of course, if you have been late ten times in the last ten months, nothing is going to help you.
It usually takes a month or two for the bureaus to update the new balance reduction. Once it is updated the score could go up dramatically.
]]>Prices of mortgage bonds whose underlying loans carry high interest rates increased after US-controlled mortgage financiers Fannie Mae and Freddie Mac detailed their changes to the Home Affordable Refinance Programme, a reflection of investor sentiment that there will not be a wave of refinancings wiping out gains from securities trading above par.
]]> Analysts from Barclays to BNP Paribas said they were underwhelmed by the changes, which came about three weeks after the White House announced the Harp initiative would be retooled.“It was much weaker than expected,” said Anish Lohokare, head of mortgage bond strategy at BNP.
Fannie and Freddie’s federal regulator, the Federal Housing Finance Agency, previously said the home loan agencies would lower fees and reduce lender liability for soured mortgages. The FHFA also said it would allow deeply “underwater” borrowers, those who owe significantly more on their mortgages than their homes are worth, to be eligible for the refinance initiative.
But investors’ bets indicate that borrowers who owe more on their mortgage than their home is worth will continue to struggle to refinance out of expensive loans and take advantage of record low interest rates, undercutting US policymakers’ renewed emphasis on boosting the ailing US property market and helping troubled borrowers avoid default.
The price of mortgage securities backed by Fannie and Freddie increased across the board for bonds with 30-year home loans with fixed interest rates at least 200 basis points above the current national average.
“The bonds traded up because there was no surprise,” said Vincent Fiorillo, portfolio manager at Doubleline Capital, a money manager.
Bank of America analysts said the announcements by Fannie and Freddie are a “slight positive” for mortgage securities backed by high interest rate loans. While changes such as reduced fees would be a “boon to borrowers”, investors should rest easy because the fees will still exist and other impediments to refinancing still exist.
A key gauge of refinancing activity from the Mortgage Bankers Association decreased more than 12 per cent for the week ending November 11 from the previous week. The refinance index is down 24 per cent compared with the same period last year, despite lower interest rates.
Borrowers will probably not be able to take advantage of a revamped Harp initiative for months, analysts said, scuttling hopes that the programme could provide a quicker boost to the housing market.
]]>Lagarde said policymakers need to act more aggressively to reduce the amount of principal home owners owe on their mortgages. About one in four home owners are underwater in the country, owing more on their mortgages than their homes are currently worth. She also said the government needs to help more home owners take advantage of low mortgage rates by refinancing their loans to reduce their monthly payments.
]]> "The downside risks to the global economy are increasing," Lagarde said. "Those risks have been aggravated further by a deterioration in confidence and a growing sense that policymakers do not have the conviction, or simply are not willing, to take the decisions that are needed."On Friday, Federal Reserve Chairman Ben Bernanke also urged Congress to work together to do more to stimulate the economy. While Bernanke did not announce any new steps to stimulate the economy, he said the Fed would discuss more options at its policy meeting at the end of September. One move being speculated that the Fed might take is doing a third round of bond purchases, which could lower long-term interest rates even more.
Source: “IMF Chief Urges US Policymakers to Help the Ailing Economy and the Struggling Housing Market,” Associated Press (Aug. 27, 2011)
]]>This is the first time since April 2010 that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November when the index rose 10.6 percent.
Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said.
“Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn., Indianapolis, Minneapolis, Houston, and Seattle,” Yun added.
Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal, sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”
“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.
Regional Performance
▪ The PHSI in the Northeast rose 7.3 percent to 69.2 in May and is 4.4 percent above a year ago.
▪ In the Midwest, the index jumped 10.5 percent to 82.8 and is 17.2 percent higher than May 2010.
▪ Pending home sales in the South increased 4.1 percent to an index of 95.0 in May and are 14.6 percent higher than a year ago.
▪ In the West, the index surged 12.9 percent to 100.6 and is 13.5 percent above May 2010.
Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.
Source: NAR
]]>* Check at least three lenders and at least three title companies before choosing one. There can be an advantage to going to the same servicer that handles your loan now, because they may require less documentation, but always consult with at least one other direct lender to compare rates and fees.
]]> Ask the title company for a reissue rate on your owner's title insurance, this step can save as much as 35 percent on the premiums.Refinancing When You Shouldn't - Refinancing can be a mistake if you don't plan to stay in your home for several years.
One customer wanted to refinance in order to improve his property and rent it, but he would have ended up with a larger mortgage and then needed a different loan because the property would no longer be his principal residence. The key is to make sure the refinance has a net tangible benefit to the homeowner.
Borrowers need to decide how long they intend to stay in the property and determine the break-even point when the savings outweigh the costs before choosing to refinance.
Not Keeping Up With Borrower Responsibilities
Homeowners must rely on a lender to refinance, but they have obligations of their own that, if not met, could derail the mortgage refinance. Borrowers must have good credit to refinance, with most lenders requiring a credit score of 640 and above even for a loan insured by the Federal Housing Administration.
Lenders can check the borrowers' credit again just before the closing, so you need to maintain good credit and avoid taking on new debt even after the refi has been approved.
Check the lock-in date for the interest rate on your new loan to make sure you can close before the rate expires. Be sure to turn in all your documentation as soon as it is requested, because a delay could mean that your closing date must be pushed back.
Mount Kisco Real Estate - Peekskill Real Estate - Ardsley Real Estate - Valhalla Real Estate - Brewster Real Estate
]]>If you think there’s no competition in this sluggish real estate market, think again.
A survey released Thursday by online real-estate firm Move Inc. suggests housing markets around the country are heating up with more activity from investors. The survey of 1,000 investors found that they will be more active than typical homebuyers by 3:1. More than half think prices will stay about the same over the next six months to a year, but 22% said prices will rise. And 23% said prices will fall.
For the traditional homebuyer, the flood of investors represents robust competition. Why will investors usually win out? Two-thirds surveyed say first-time home buyers’ struggles to secure a mortgage actually helps investors; investors can often pay cash and command deep discounts for doing so.
]]>The Consumer Financial Protection Bureau released two alternative mortgage disclosure forms, each taking only the front and back of a sheet of paper. The forms would combine and replace the current two-page Truth in Lending Act disclosure and the three-page good faith estimate required under the Real Estate Settlement Procedures Act, or RESPA. The bureau, created by last year's Dodd-Frank financial reform law, will test the prototypes and incorporate feedback through September. It's calling the effort the "Know Before You Owe" project.
]]> "A home loan is the biggest financial commitment most Americans will make in a lifetime," says Elizabeth Warren, who runs the bureau. "With a clear, simple form, consumers can better answer two basic questions: Can I afford this mortgage? And, can I get a better deal somewhere else? That's good for American families and the markets they depend on."The prototypes emphasize the monthly loan payment, interest rate, potential cautions and other loan features, with boxes and arrows highlighting the most pertinent data.
Under Dodd-Frank, the bureau must propose new rules for simplified mortgage forms before July 2012. Staff started drafting the prototypes "quickly out of the gate" in consultation with federal regulators who have been working on streamlining the forms for years, Warren says.
The agency expects five rounds of evaluation and revision, with consumer testing in five cities and input from the industry, before the forms are finalized this fall. Then, the bureau will publish proposed regulations and a draft model form in order to solicit more comment and run quantitative tests before the rules are final.
Financial industry executives praise the move. "We think it's a great step," says Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable. "If everybody fully understands the product you're entering into, both the consumer and the lender win."
The Mortgage Bankers Association's more guarded response notes that the industry spent significant money 18 months ago on RESPA changes -- costs that are borne by consumers.
"Making mortgages easier to understand for prospective borrowers has been a long-term priority for the mortgage industry and we are pleased to see the initial prototypes take a step in that direction. One of the challenges this effort inevitably faces is trying to strike the right balance between simplification and providing as much information as possible to help borrowers make the most informed choices," MBA President David H. Stevens said in a statement.
Alex J. Pollock, a resident fellow at American Enterprise Institute who proposed a one-page form in 2007, notes that the average mortgage closing form is 80 to 85 pages, which could be boiled down. He says the proposed forms don't include the ratio of debt to income, a key factor in whether individuals can afford a loan.
"The real object of this is not to give someone a piece of paper that they passively consume but to get them to actively think about the borrowing commitment they are about to enter into," Pollock says. "Anything that moves in that direction I am for."
Even as Warren prepares the new consumer bureau to assume regulatory power July 21, Wall Street lobbyists and their Republican allies in Congress seek to curb the bureau's power. Pending House legislation would replace the director position with a five-member bipartisan commission and make it easer for other regulators to overturn CFPB rules. President Barack Obama is expected to appoint Warren as director during an upcoming congressional recess, given that 44 Republican senators have pledged to block any director nomination.
"This is all part of a unified campaign to weaken and delegitimize the agency," says David Arkush, director of Public Citizen's Congress Watch division, which supports the bureau and Warren as director. "If you had some basic consumer protections in the financial services arena, there's a really good chance the housing bubble wouldn't have gotten as large as it got and you wouldn't have had so many predatory lending and mortgage abuses."
Mark Calabria, director of financial regulation studies at public policy research organization the Cato Institute, says overly burdensome regulation could lead to a contraction in credit and less stability in the financial system. "Two pages is still too long. Borrowers shop on only a few items," Calabria says about the proposed forms.
]]>To gauge how quickly properties move in 146 metro areas, Realtor.com calculated the median age of inventory for the month of April in those markets. In order to obtain the median, the site subtracted a property's listed date from whichever was earlier: its end listing date or the end of the time period, and took the median of all the resulting individual days on the website.
]]> In the U.S. overall, the median inventory age was 95 days in April, a 13.1 percent increase from April 2010. Denver and Oakland, Calif., had the shortest medians of all 146 markets: 44 days each. Every market in the top 10 saw its median inventory age rise on a year-over-year basis. The Denver market saw the biggest jump, up 25.7 percent, followed by Omaha, Neb., up 25.5 percent, to 59 days.The Washington, D.C., metro area accounted for two of the markets in the top 10 list. Realtor.com separates data for metro areas that encompass multiple states.
Nine out of the 10 fastest-moving metros saw their inventory drop year-over-year. Both Washington, D.C., area metro segments in the top 10 saw the sharpest declines. Among the top 10, only Oakland saw its listings inventory rise, by 5 percent. Overall, total listings fell 8.3 percent in the U.S. in April.
Seven out of the 10 markets saw their median list prices fall year-over-year in April. Two Central Valley metro areas hit hard by foreclosures saw the biggest declines: Fresno, Calif., down 15.3 percent to $160,000, and Bakersfield, Calif., down 10 percent to $135,000.
The median list price in Denver remained essentially flat year-over-year, at $249,900. Only Omaha and the Virginia segment of the Washington, D.C., metro area saw their list prices rise: up 1.9 percent and 6 percent, respectively. The median list price nationwide fell 4 percent last month, to $191,900.
]]>The search rankings are based on the number of visitors that viewed properties in 146 metro areas in the U.S.
Chicago was the most-searched market among the metro areas, followed by the only other Midwestern metro on the top 10 list, Detroit. Three Western metros rounded out the top five: Las Vegas, Phoenix, and Los Angeles-Long Beach.
Except for Philadelphia in the Northeast at No. 7, the rest of the metros on the list were in the South: Tampa-St. Petersburg-Clearwater, Fla.; Atlanta; Dallas; and Orlando, Fla. The metro areas in the top 10 did not change from March.
Each of the 10 most-searched markets saw their median list price fall year-over-year in April. Detroit saw the biggest drop, down 18.2 percent to $89,900, followed by Atlanta, with a 13.6 percent drop to $159,900.
Dallas saw the smallest drop in median list price, down 1.1 percent to $189,900, followed by Philadelphia with a 4 percent drop to $240,000. The U.S. median list price fell 4 percent to $191,900.
]]> Source: Realtor.com - Total listings inventory fell year-over-year in all but two markets in the top 10: Las Vegas, where it rose 8.3 percent; and Philadelphia, where it rose 0.1 percent. Inventory fell the most in Orlando, -33.8 percent, and in Detroit, -23.7 percent. In the U.S. overall, listings inventory fell 8.3 percent last month.Eight of the 10 most-searched markets had a lower median age of inventory than the U.S. median (95 days). Realtor.com calculates the median by subtracting a property's listed date from whichever is earlier: the end listing date or the end of the month, and taking the median of all the resulting individual days on site.
Los Angeles-Long Beach was the fastest-moving market among the 10, with a median inventory age of 61 days. Detroit was close behind at a median 62 days. Seven out of the 10 markets saw their median inventory age rise year-over-year in April and Detroit saw the biggest jump, up 72.2 percent.
Tampa-St. Petersburg-Clearwater had the highest median inventory age among the 10 markets: 103 days, followed by Chicago: 102 days.
Eight of the 10 markets had higher foreclosure rates than the national average in first-quarter 2011. Nationwide, 1 in 191 housing units received a foreclosure filing -- default notice, scheduled auction, or bank repossession -- last quarter, according to RealtyTrac.
]]>The serious delinquency rate -- the percentage of loans in foreclosure or delinquent by 90 days or more -- was 8.1 percent during the first quarter, down from 8.6 percent during the last three months of 2010 and 9.54 percent a year ago.
]]> The percentage of mortgages in foreclosure was 4.52 percent, down from a record high of 4.64 percent in the fourth quarter, and the percentage of loans behind by 90 days or more dropped for the fifth consecutive quarter, to 3.58 percent."Of particular importance is that the drop in the percentage of loans 90 days or more past due was driven by improving numbers for loans originated between 2005 and 2007," said MBA chief economist Jay Brinkmann, in a statement.
]]>The incentive only apply to Freddie Mac’s HomeSteps properties sold to owner-occupant buyers and does not apply to investor purchases.
Freddie Mac is also offering up extra incentives for you to entice buyers with: The government-sponsored enterprise (GSE) is offering up to 3.5 percent in closing cost assistance to buyers. Also, buyers of some HomeStep properties may be eligible for a two-year Home Protect limited warranty, which covers electrical, plumbing, air conditioning, and other major appliances and systems. Buyers may be eligible for an up to 30 percent discount on the purchase of appliances too.]]> Freddie Mac is trying to chip away at its high REO inventories. The GSE reported more than 65,000 REO homes at the end of the first-quarter and expects its REO inventory to continue to jump this year.
In a similar move, Fannie Mae offered an incentive program with up to 3.5 percent closing cost assistance on its HomePath properties. Initial offers on eligible properties, however, must have been submitted by April 11 and close by June 30.
Source: “Freddie Mac Offering Selling Agent Bonuses to Move REOs,” DSNews.com (May 16, 2011)
]]>The quantity of foreclosure homes in any area gives a better picture of the employment in the area compared with city-wide employment figures. An area with less than one foreclosure per 10,000 dwellings indicates low unemployment for that zip code even if pockets within the same city are experiencing high unemployment.
]]> By comparing the asking price for foreclosures in a zip code to similar non-foreclosure houses in the same zip code, real estate professionals can gauge the short-term and long-term investment opportunities for that zip code. If there is no greater than a 20 percent difference between the two, the area will recover quickly. The smaller the percentage of difference, the more quickly that zip code will rebound.To contact Elaine Zimmermann, email elainezimm@aol.com. For more information visit www.foreclosuresUS.com
]]>But home values and employment data in geographic areas as large as cities or SMSA are irrelevant to investors. Sophisticated purchasers need information for areas no larger than zip codes to make informed decisions.
How can a real estate professional provide information to investors that will spotlight homes with the greatest probability for strong near term and long term appreciation?
]]>