Rule 1: You can't time the bottom
Face it: The house you buy today will more than likely be worth less next year. That could get you thinking about trying to time the bottom. Resist. It's harder to do than you think, and this is the best buyers have had it in two decades, with inventories up and mortgage rates low.
Pace yourself, find the perfect place and drive a hard bargain: Ignore the seller's asking price and bid 10% below what comparable homes are selling for. If the seller balks, move on. Remember that if you're trading up, your home could sit. So sell before you buy.
Real Estate Survival Guide
Rule 2: One reason to buy now - mortgage rates
Homes are plentiful and will remain so, but financing will be getting more expensive. True, the Federal Reserve has slashed interest rates, but fixed mortgages don't directly follow the Fed. They reflect the bond market's expectations about inflation, which remains a concern. The 30-year, now at 6.1%, will likely reach mid-6% by December and 7% in 2009, says Celia Chen of Moody's Economy.com.
That means there could be a penalty for waiting to buy even if prices fall more. Today a $250,000 loan would set you back $1,500 a month. At 7%, a $1,500 payment gets you only a $225,000 mortgage. As for variable-rate loans, the spread between conforming ARMs and fixed loans is too narrow to do you much good.
Rule 3: Another reason to buy - rates on big mortgages
Mortgages in amounts greater than $417,000 - the limit for buying by federally sponsored mortgage agencies - usually run a fifth of a percentage point above conventional products. But investors are shunning jumbos, which now average 7.2% and are unlikely to drop much this year, according to HSH Associates.
Certain jumbo borrowers could get relief, however. A new law allows Freddie Mac and Fannie Mae to buy loans as large as $729,750 in 71 high-priced areas. So far "jumbo conforming" loans average 6.6%. The program has gotten off to a slow start; you'll need to shop around. And unless Congress acts, this bargain will disappear at year-end.
Rule 4: Don't buy cheap; buy good schools
By now you've heard from somebody who knows somebody who got a great deal on a foreclosed property. But when you buy a house, you're also buying into a neighborhood. And foreclosures tend to be bunched in areas where residents and speculators alike took out exotic mortgages to get into homes they subsequently found they couldn't afford. That's not a recipe for stability. Prices and quality of life could both decline further.
Similarly, avoid developments that popped up in the past few years. They too likely have a lot of owners with risky loans and little equity, says Mike Larson of Weiss Research. Instead, go for areas with highly rated schools. They generally fare better during downturns, and that pattern is holding today, according to a recent study by real estate site Trulia.com.
Rule 5: Make sure your agent has your interest at heart
The real estate game has a built-in conflict of interest, since the listing agent and your agent both get paid by the seller. And these days more sellers are offering extra cash to buyer's agents.
So make sure you're not being steered to a house that's better for your agent than for you. Agree up front on his commission (typically 3%) and that any extra payments will go to you, says Jon Boyd, past president of a buyer's agent trade group.
As a professional agent I have your best interest at heart. So give me a call with all you mortgage financing needs.
By Amanda Gengler, Money Magazine
Wednesday, May 28, 2008
Tuesday, May 20, 2008
Senate Deal Struck on Mortgage Aid
Plan would let government back loans for at-risk borrowers. Key lawmakers reach compromise: Taxpayers will not be on the hook if loans go bad.
Senate Banking Committee leaders said Monday that they have come to a deal on a housing bill that would prevent foreclosures, create affordable housing and revamp oversight of two of the mortgage market's biggest players: Fannie Mae and Freddie Mac.
A major part of the legislation would allow the Federal Housing Administration to insure $300 billion in new loans for at-risk borrowers if lenders agree to write down loan balances below the appraised value of borrowers' homes.
The deal came as pressure has been building in Washington to respond to the huge increases in foreclosure filings. It was struck between the top Democrat and Republican on the Banking Committee: Chairman Christopher Dodd, D-Conn., and Ranking Member Richard Shelby, R-Ala.
"This legislation is good news for both the markets and homeowners," Dodd said in a statement. "The bill addresses the root of our current economic problems - the foreclosure crisis - by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes."
Dodd and Shelby had been in prolonged negotiations over the bill.
A key sticking point has been Shelby's push to shield taxpayers if borrowers default on their payments after getting government-backed loans. He has said that he wants the FHA plan funded by redirecting money that Dodd's original bill earmarked for a new affordable housing trust fund. The funds would be paid by Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
"My primary consideration ... has been to protect the American taxpayer, and I believe we've made significant progress toward that goal," Shelby said in a statement.
Dodd said Monday that the compromise bill would still create a fund to spur affordable housing but would use the funding for that program in the first year to backstop the FHA mortgage program.
The new FHA program could benefit an estimated 500,000 people. It could cost as much as $500 million, which would be paid for by Fannie and Freddie. If it turns out the costs fall below that level - that is, should few if any borrowers default on their new FHA loans - the funds from Fannie and Freddie would be redirected back to the affordable housing trust fund.
Regulating the big boys
Another big issue in the legislation is a measure that would provide for stricter oversight of Fannie and Freddie. The two government-sponsored enterprises guarantee the purchase and sale of home mortgages in the secondary market.
Shelby had been campaigning for more stringent safeguards than Dodd's original bill provided. Both Fannie and Freddie have experienced accounting scandals in the past and both saw steep first-quarter losses.
The Banking Committee is scheduled to debate and vote on the bill Tuesday. The measure is certain to pass at the committee level and Dodd said he is hopeful he can get the votes he needs to pass the bill through the full Senate in time to go to President Bush before the July 4 congressional recess.
It remains an open question whether Bush would support the bill. He has threatened to veto a similar bill sponsored by Rep. Barney Frank, D-Mass., and passed by the House on May 8 by a 266-154 vote. But Dodd said that while the White House hasn't endorsed his bill yet, "there's been some positive reaction out of the White House."
A spokesman for Frank said the congressman was pleased a compromise had been reached. "We look forward to working with them," he said.
By Jeanne Sahadi, CNNMoney.com senior writer
Senate Banking Committee leaders said Monday that they have come to a deal on a housing bill that would prevent foreclosures, create affordable housing and revamp oversight of two of the mortgage market's biggest players: Fannie Mae and Freddie Mac.
A major part of the legislation would allow the Federal Housing Administration to insure $300 billion in new loans for at-risk borrowers if lenders agree to write down loan balances below the appraised value of borrowers' homes.
The deal came as pressure has been building in Washington to respond to the huge increases in foreclosure filings. It was struck between the top Democrat and Republican on the Banking Committee: Chairman Christopher Dodd, D-Conn., and Ranking Member Richard Shelby, R-Ala.
"This legislation is good news for both the markets and homeowners," Dodd said in a statement. "The bill addresses the root of our current economic problems - the foreclosure crisis - by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes."
Dodd and Shelby had been in prolonged negotiations over the bill.
A key sticking point has been Shelby's push to shield taxpayers if borrowers default on their payments after getting government-backed loans. He has said that he wants the FHA plan funded by redirecting money that Dodd's original bill earmarked for a new affordable housing trust fund. The funds would be paid by Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
"My primary consideration ... has been to protect the American taxpayer, and I believe we've made significant progress toward that goal," Shelby said in a statement.
Dodd said Monday that the compromise bill would still create a fund to spur affordable housing but would use the funding for that program in the first year to backstop the FHA mortgage program.
The new FHA program could benefit an estimated 500,000 people. It could cost as much as $500 million, which would be paid for by Fannie and Freddie. If it turns out the costs fall below that level - that is, should few if any borrowers default on their new FHA loans - the funds from Fannie and Freddie would be redirected back to the affordable housing trust fund.
Regulating the big boys
Another big issue in the legislation is a measure that would provide for stricter oversight of Fannie and Freddie. The two government-sponsored enterprises guarantee the purchase and sale of home mortgages in the secondary market.
Shelby had been campaigning for more stringent safeguards than Dodd's original bill provided. Both Fannie and Freddie have experienced accounting scandals in the past and both saw steep first-quarter losses.
The Banking Committee is scheduled to debate and vote on the bill Tuesday. The measure is certain to pass at the committee level and Dodd said he is hopeful he can get the votes he needs to pass the bill through the full Senate in time to go to President Bush before the July 4 congressional recess.
It remains an open question whether Bush would support the bill. He has threatened to veto a similar bill sponsored by Rep. Barney Frank, D-Mass., and passed by the House on May 8 by a 266-154 vote. But Dodd said that while the White House hasn't endorsed his bill yet, "there's been some positive reaction out of the White House."
A spokesman for Frank said the congressman was pleased a compromise had been reached. "We look forward to working with them," he said.
By Jeanne Sahadi, CNNMoney.com senior writer
Thursday, May 15, 2008
10 Fastest-Growing Real Estate Markets
Yes, even amid the housing crisis, parts of the U.S. are still expected to post price gains in the coming year, according to Money Magazine. Here's where to look.
1.) McAllen, Texas
12-month forecast: 4%
Median home price: $109,000
One year price change: 2.1%
Five year price change: 23.3%
Change in foreclosure rate: 23%
2.) Rochester, N.Y.
12-month forecast: 2.7%
Median home price: $121,000
One year price change: 3.4%
Five year price change: 20.1%
Change in foreclosure rate: 5%
3.) Birmingham, Alabama
12-month forecast: 2.7%
Median home price: $156,000
One year price change: 2.9%
Five year price change: 29.4%
Change in foreclosure rate: 20%
4.) Syracuse, N.Y.
12-month forecast: 2.6%
Median home price: $126,000
One year price change: 0.8%
Five year price change: 29.5%
Change in foreclosure rate: 27%
5.) Buffalo/Niagara Falls, N.Y.
12-month forecast: 2.4%
Median home price: $105,000
One year price change: 1.6%
Five year price change: 24.5%
Change in foreclosure rate: 14%
6.) New Orleans, La.
12-month forecast: 2.2%
Median home price: $158,000
One year price change: 1%
Five year price change: 43.7%
Change in foreclosure rate: 49%
7.) Scranton, P.A.
12-month forecast: 2.2%
Median home price: $128,000
One year price change: 7.2%
Five year price change: 41.1%
Change in foreclosure rate: 8%
8.) Grand Rapids, Mich.
12-month forecast: 1.9%
Median home price: $124,000
One year price change: -3%
Five year price change: 8.3%
Change in foreclosure rate: 37%
9.) Baton Rouge, La.
12-month forecast: 1.9%
Median home price: $170,000
One year price change: 5.7%
Five year price change: 38.3%
Change in foreclosure rate: 14%
10.) El Paso, Texas
12-month forecast: 1.8%
Median home price: $134,000
One year price change: 6.9%
Five year price change: 51.9%
Change in foreclosure rate: 32%
Taken from Money Staff provided by Money on CNNMoney.com
1.) McAllen, Texas
12-month forecast: 4%
Median home price: $109,000
One year price change: 2.1%
Five year price change: 23.3%
Change in foreclosure rate: 23%
2.) Rochester, N.Y.
12-month forecast: 2.7%
Median home price: $121,000
One year price change: 3.4%
Five year price change: 20.1%
Change in foreclosure rate: 5%
3.) Birmingham, Alabama
12-month forecast: 2.7%
Median home price: $156,000
One year price change: 2.9%
Five year price change: 29.4%
Change in foreclosure rate: 20%
4.) Syracuse, N.Y.
12-month forecast: 2.6%
Median home price: $126,000
One year price change: 0.8%
Five year price change: 29.5%
Change in foreclosure rate: 27%
5.) Buffalo/Niagara Falls, N.Y.
12-month forecast: 2.4%
Median home price: $105,000
One year price change: 1.6%
Five year price change: 24.5%
Change in foreclosure rate: 14%
6.) New Orleans, La.
12-month forecast: 2.2%
Median home price: $158,000
One year price change: 1%
Five year price change: 43.7%
Change in foreclosure rate: 49%
7.) Scranton, P.A.
12-month forecast: 2.2%
Median home price: $128,000
One year price change: 7.2%
Five year price change: 41.1%
Change in foreclosure rate: 8%
8.) Grand Rapids, Mich.
12-month forecast: 1.9%
Median home price: $124,000
One year price change: -3%
Five year price change: 8.3%
Change in foreclosure rate: 37%
9.) Baton Rouge, La.
12-month forecast: 1.9%
Median home price: $170,000
One year price change: 5.7%
Five year price change: 38.3%
Change in foreclosure rate: 14%
10.) El Paso, Texas
12-month forecast: 1.8%
Median home price: $134,000
One year price change: 6.9%
Five year price change: 51.9%
Change in foreclosure rate: 32%
Taken from Money Staff provided by Money on CNNMoney.com
Tuesday, May 6, 2008
NEHEMIAH
What is the Nehemiah Program?
The Nehemiah Program is the nation's largest privately funded downpayment assistance program, helping thousands of people achieve their dream of homeownership. The Nehemiah Program provides gift funds to qualified homebuyers who purchase participating homes using an eligible loan program, such as a Federal Housing Administration (FHA) loan. The Nehemiah Program is approved to provide gift funds by the FHA, which allows charitable organizations to provide gift funds toward downpayment and closing costs.
The Nehemiah Program gift funds are monies offered by Nehemiah to qualified homebuyers, requiring no repayment, no silent second mortgage, and no re-capture penalties. The gift funds are offered toward the purchase of a participating home anywhere in the United States-with no income limitations and no geographical restrictions. The money given to the homebuyer is a true gift. Nehemiah charges a nominal processing fee that may be paid by the seller, lender or homebuyer.
Who is Eligible?
The Nehemiah Program offers gift funds to any qualified homebuyers, not just to first-time homebuyers. A qualified homebuyer is anyone who:
* Purchases a Nehemiah participating home to be owneroccupied (non-occupant co-borrower(s) may assist owneroccupant to qualify for mortgage).
*Uses an eligible loan program, such as an FHA loan or a conventional loan product that allows gifts from charitable organizations.
What is Recommended for the Homebuyer?
Nehemiah recommends that homebuyers seriously consider (1) homeownership education courses and (2) home inspections.
(1) Homeownership Education Courses: Nehemiah strongly encourages, but does not require, all homebuyers to complete a homeownerhip education course.
(2) Home inspection: Nehemiah strongly encourages, but does not require home inspections. Home inspections provide the homebuyers with an impartial evaluation and important information about the property's overall condition. An inspection may provide homebuyers with a list of items that need to be repaired to replaced.
Harnan Financial Group, Inc. can help you to purchase your home. Please give us a call!!
(310) 649-2221
nancy@harnanloans.com
For more information on the Nehemiah Program please go to www.getdownpayment.com
Excerpts taken from The Nehemiah Program Guidelines at getdownpayment.com
The Nehemiah Program is the nation's largest privately funded downpayment assistance program, helping thousands of people achieve their dream of homeownership. The Nehemiah Program provides gift funds to qualified homebuyers who purchase participating homes using an eligible loan program, such as a Federal Housing Administration (FHA) loan. The Nehemiah Program is approved to provide gift funds by the FHA, which allows charitable organizations to provide gift funds toward downpayment and closing costs.
The Nehemiah Program gift funds are monies offered by Nehemiah to qualified homebuyers, requiring no repayment, no silent second mortgage, and no re-capture penalties. The gift funds are offered toward the purchase of a participating home anywhere in the United States-with no income limitations and no geographical restrictions. The money given to the homebuyer is a true gift. Nehemiah charges a nominal processing fee that may be paid by the seller, lender or homebuyer.
Who is Eligible?
The Nehemiah Program offers gift funds to any qualified homebuyers, not just to first-time homebuyers. A qualified homebuyer is anyone who:
* Purchases a Nehemiah participating home to be owneroccupied (non-occupant co-borrower(s) may assist owneroccupant to qualify for mortgage).
*Uses an eligible loan program, such as an FHA loan or a conventional loan product that allows gifts from charitable organizations.
What is Recommended for the Homebuyer?
Nehemiah recommends that homebuyers seriously consider (1) homeownership education courses and (2) home inspections.
(1) Homeownership Education Courses: Nehemiah strongly encourages, but does not require, all homebuyers to complete a homeownerhip education course.
(2) Home inspection: Nehemiah strongly encourages, but does not require home inspections. Home inspections provide the homebuyers with an impartial evaluation and important information about the property's overall condition. An inspection may provide homebuyers with a list of items that need to be repaired to replaced.
Harnan Financial Group, Inc. can help you to purchase your home. Please give us a call!!
(310) 649-2221
nancy@harnanloans.com
For more information on the Nehemiah Program please go to www.getdownpayment.com
Excerpts taken from The Nehemiah Program Guidelines at getdownpayment.com
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