Existing home sales surge as interest rates point higher

Sales of previously occupied U.S. homes bounced back in September to their strongest pace since January as mortgage rates tick higher, motivating buyers to get off the sidelines.

The National Association of Realtors said Thursday that existing homes sales rose 7% compared with August to a seasonally-adjusted annual rate of 6.29 million units. That was stronger than the 6.11 million units that economists had been expecting, according to FactSet.

Sales were down 2.3% compared with September last year, a time when home purchases surged as buyers who had held off during the early months of the pandemic returned in force.

“The increase in sales in the latest month I would attribute to mortgage rates,” said Lawrence Yun, the NAR’s chief economist. “This autumn season looks to be one of the best autumn home sales seasons in 15 years.”

Yun noted that a dip in mortgage rates in August gave buyers urgency to close deals on homes, which translated into the sharp September increase in completed transactions.

While the average rate for a 30-year mortgage remains near historic lows, it has been inching higher since August, when the weekly rate averaged 2.77%, according to mortgage buyer Freddie Mac.

This week, the average rate rose to 3.09%, the highest level since April, when it peaked at 3.18%. A year ago, the rate averaged 2.8%. When mortgage rates rise, it gives would-be homeowners less buying power.

Economists expect mortgage rates to rise up to 4% next year as the Federal Reserve takes action to control rising inflation. The central bank is widely expected to announce a timetable for reducing its monthly bond purchases at its policy meeting next month. Those bond purchases have helped keep mortgage rates at ultralow levels for much of the last 18 months.

The median home price jumped to $352,800 last month, a 13.3% increase from September last year. The rise in prices continued to weigh on first-time buyers, who accounted for 28% of all sales last month. That’s the lowest level since July 2015, the NAR said.

Homes purchased in cash rose 23% in September from the previous month. Individual investors, who account for many cash sales, accounted for 13% of all home sales last month.

Despite the sharp increase in sales last month, there are signs the housing market frenzy that drove 20% to 25% annual increases in the median home price is easing. Properties on the market are receiving fewer multiple offers and buyers increasingly are refusing to waive their right to a home inspection or appraisal, Yun said.

Still, the inventory of homes on the market remains tight in much of the country, which continues to support higher prices.

At the end of September, the inventory of unsold homes stood at just 1.27 million homes for sale, down 0.8% the previous month and down 13% from a year ago. At the current sales pace, that amounts to a 2.4 months’ supply, down from 2.7 months a year ago, the NAR said.

Homes continue to sell within days of being put up for sale. Homes typically remained on the market 17 days before getting snapped up last month. That’s held steady the past six months. In a market that’s more evenly balanced between buyers and sellers, homes typically remain on the market 45 days. All told, 86% of homes sold last month were on the market for less than 30 days.

The inventory of homes for sale should begin to improve next year, as builders continue to ramp up construction and the end of mortgage forbearance programs force homeowners in financial straits to put their home up for sale, Yun said.

“The days of inventory being down 20% or 25%, those days are over,” Yun said. “The decline is lessening and soon in 2022 we’ll begin to see inventories are higher year-over-year.”

-Associated Press

More Americans signed contracts to buy homes in June

SILVER SPRING, Md. (AP) — The number of Americans signing contracts to buy homes rose for the second straight month after a devastating spring freeze brought on by the coronavirus outbreak.

The National Association of Realtors said Wednesday that its index of pending sales rose 16.6%, to 116.1 in June. That’s up from a reading of 99.6 in May.

Contract signings are now 6.3% ahead of where they were last year after being significantly behind last year’s pace due to the pandemic. An index of 100 represents the level of contract activity in 2001.

All four regions saw more contract signings for the second straight month. The Northeast led the way with a 54.4% increase. Sales in the Midwest, South and West all jumped around 12%.

“It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” said Lawrence Yun, NAR’s chief economist. “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”

Freddie Mac reported last week that average interest rates on a 30-year fixed rate mortgage rose to 3.01%. The average had been 2.98% the previous week, the first time in 50 years that it slipped below 3%. The Federal Reserve wraps up a two day meeting Wednesday and is not expected to change its main borrowing rate.

In May, the number of Americans signing contracts to buy homes rebounded a record 44.3% after plunging during the usually busy spring season as buyers and sellers were sidelined by coronavirus-related closures and regulations.

May’s recovery was the highest month-over-month gain in the index since since its inception in January 2001.

Last week, the government reported that sales of new homes jumped 13.8% in June, the second straight increase after two months when sales plunged as the country went into lockdown because of the coronavirus. June’s increase followed a 19.4% jump in May, further evidence the housing market has turned around.

Associated Press

Robinsons Land offers virtual catalog for home buyers

MANILA - Robinsons Land Corp said Friday it developed an online facility to help home buyers inquire about and purchase property remotely during the coronavirus lockdown.

Digital catalogs and virtual tours are used to "showcase" high-rise residential developments, the Gokongwei group's property arm said in a statement. [CATALOGS www.robinsonsproperties.com]

Unit reservations can be done from home by sending scanned copies of required documents, government IDs and proof of online payments, it said.

"Through this online facility, RLC aims to make home buying possible and convenient for property seekers, especially now that we are on enhanced community quarantine nationwide," RLC said in a statement.

Other inquiries should be submitted to its email address and other official platforms. 

source: news.abs-cbn.com

Apple offers $2.5B to address California housing crisis

Apple said Monday it would commit $2.5 billion over the next two years to help address the shortage of affordable housing in California and reduce homelessness.

The move by Apple follows similar initiatives from Silicon Valley peers Google and Facebook, which each have pledged $1 billion for housing programs.

"Before the world knew the name Silicon Valley, and long before we carried technology in our pockets, Apple called this region home, and we feel a profound civic responsibility to ensure it remains a vibrant place where people can live, have a family and contribute to the community," said Apple chief executive Tim Cook in a statement.

"Affordable housing means stability and dignity, opportunity and pride. When these things fall out of reach for too many, we know the course we are on is unsustainable, and Apple is committed to being part of the solution."

Apple said data showed some 30,000 people left San Francisco between April and June of 2019 and that its efforts are geared to help "community members like teachers, firefighters, first responders and service workers" who cannot find affordable lodging.

Apple said it was working with California Governor Gavin Newsom on several programs to address housing and homelessness.

The iPhone maker said $1 billion will go to the state's affordable housing fund that will extend credit to develop and build additional housing faster and at a lower cost.

Apple also said it would make available land it owns in San Jose worth some $300 million for homes.

The company is committing $200 million to support new lower-income housing in the Bay Area, including $150 for a public-private partnership.

It will also offer $50 million to support the efforts to address homelessness in Silicon Valley with the nonprofit group Destination: Home.

"We have worked closely with leading experts to put together a plan that confronts this challenge on all fronts, from the critical need to increase housing supply, to support for first-time homebuyers and young families, to essential philanthropy to assist those at greatest risk," said Lisa Jackson, Apple's vice president for environment and social initiatives.

source: news.abs-cbn.com

Singapore moves to cool down resurgent property market

SINGAPORE -- Singapore raised buyers' fees and tightened loan requirements from Friday to cool a resurgent property sector, warning that rising prices could be destabilizing as interest rates rise.

Private residential prices in the affluent city-state have surged by 9.1 percent over the past year on strong demand after declining gradually for close to 4 years, the government said.

A statement, issued jointly by the central bank and the ministries of finance and national development, warned that the rise in property prices must not "run ahead of economic fundamentals".

Allowing prices to surge unchecked could "raise the risk of a destabilizing correction later, especially with rising interest rates and the strong pipeline of housing supply," the statement added.

The government raised by 5 percentage points the additional buyer's stamp duty (ABSD), a fee applied to the purchase price or current market value of a property, for Singapore citizens and permanent residents buying a second and subsequent house.

Citizens buying a third home and permanent residents buying a second home will now pay 15 percent in ABSD fees.

Foreign individuals buying any residential house must pay 20 percent and foreign entities 25 percent.

The loan-to-value limits for property purchases were also tightened by 5 percentage points.

"The revision to ABSD rates is likely to lead to a slowdown in the recovery of the private property market," said Lewis Ng, chief business officer of industry specialist PropertyGuru Group.

For example, a person looking to buy a second unit worth Sg$1 million (US$733,000) will have to pay an additional Sg$50,000 in cash, and a total stamp duty outlay of Sg$144,600, he said.

DBS Bank said the new cooling down measures caught the market by surprise.

But Ng said that "while this might be painful for home-seekers in the short term, it will enforce financial prudence and create a more stable property market".

Most Singaporeans and residents live in high-rise government-built apartment blocks or private condominiums.

The main Straits Times Index was down 2.22 percent after midday Friday, with property stocks among the top decliners.

source: news.abs-cbn.com

Buying your first home? Here are 7 things to consider

MANILA - We all dream of owning a home someday. And why not? A home means stability and permanence, where one’s family can grow roots, seek refuge and build a life together. At the same time, it is always a valuable asset and an investment in itself.

Have you thought about buying your own home but don’t know where to start? Have you ever wondered if you can even afford it? If you can, do you have an idea of what your money can buy? Whether you’re thinking of getting a tiny studio unit or a sprawling house with a large yard, you will need to put considerable thought into your plan.


Owning a home calls for responsibility and commitment. It calls for a lot of thought and a careful evaluation of your lifestyle, finances, as well as your present and future needs. Here are 7 factors to consider in deciding if you are ready to own your first home.

1. Are you ready for this investment?

Do you have enough funds to buy your dream home? Do you have a regular source of income? Are you getting a big inheritance soon? A house is usually a considerable investment, and you need to have enough money to be able to purchase one. If you plan to take out a loan for your home, you still need to have the financial capacity in order to qualify for financing schemes offered by both banks and developers.

2. Consider your present and future plans.

A house is not exactly easy to dispose, considering the sums involved as well as the paperwork and taxes that it entails. This is why you have to know your reasons for buying a house, and think how this fits with your life plans. For instance, are you planning to move out of the country anytime soon? If so, having a house makes you less mobile. Are you planning to have children soon? If so, you might want to think about getting something bigger than a tiny studio in order to accommodate your growing brood.

3. Location, location, location.

This is one of the most important considerations you have to think about when getting a house. Location almost always dictates price, which means while you may be able to afford a townhouse outside Metro Manila, you may have to shell out more for a similar unit in the city. At the same time, its location will affect your life – the amount of time you need to go to work, or the places you will most likely frequent. You need to think of a location that is best suited for your needs.

4. Let's talk financing.

Even if you do not have cash to pay upfront for a house, you may actually qualify for financing. Banks offer loans, as well as developers. Loans could stretch for as long as 25 years, depending on your age. Gauge your capacity to do regular amortizations, and check how it would impact your cash flow. Most financial experts recommend that payments on homes should constitute no more than 1/3 of your regular expenses. Also look at interest rates.

5. Look to the future and appreciation potential.

When buying a house, you should also consider how its value is likely to increase in the future. Look at developments that could possibly lead to an increase in the property’s value – new roads, malls or other commercial developments usually push property values higher. This means that you can actually sell your property later on and stand to earn from the transaction.

6. Remember the warning "Buyer Beware."

When buying property, you need to make sure that everything about the transaction is above board – the title should be free from liens and encumbrances, taxes should have been paid, and association dues settled. You also want an assurance that your house was built well and in keeping with building standards. This is why it is important to know the background of the seller. Some developers have a solid track record, but even then, make sure to do your research about the seller.

7. Ask yourself: To build or to buy?

Do you prefer to build your own house instead of buying one? This allows you to design everything according to your own wishes. However, it is also a more time-consuming process since you have to deal with an architect and contractor, while checking regularly on the work. You also need to find people that you can trust to build your home.

Owning your first home is a major decision, so make sure to think through the process before making any decision. Ask questions, do your research, and think about your life plans before you make the decision.

source: news.abs-cbn.com

Is the 30-Year Fixed Mortgage Actually a Lot of Work?

I typically refer to the 30-year fixed mortgage as a set-it-and-forget-it type of mortgage because it’s fixed for the entire duration of the loan.

The mortgage rate in month one is the same as the rate in month 360. The mortgage payment never changes, though the total housing payment could vary thanks to things like taxes, insurance, and PMI.

Put simply, it’s a very easy mortgage to wrap your head around, and for that reason the most popular and common choice for homeowners here in the United States.

The same isn’t true elsewhere in the world, which is one of the reasons why the 30-year fixed has been questioned a lot lately by economists and mortgage pundits.


The latest opinion comes from Benjamin Keys of The Wharton School of the University of Pennsylvania, who analyzed how monetary policy makes its way into households via the mortgages borrowers hold.

During the most recent crisis, those with adjustable-rate mortgages actually “won” in a sense because their rates adjusted lower when the government stepped in and bought tons of mortgage-backed securities while lowering other borrowing rates.

Meanwhile, those with fixed rates didn’t benefit at all, and in fact were trapped in their mortgages because of equity issues, namely underwater mortgages.

This meant those who ostensibly took on more risk were rewarded when the wheels fell off. And those who were seemingly prudent in their mortgage choice were punished because they were unable to refinance until HARP came along.

Does that mean we should all go with ARMs instead of fixed-rate loans and hope the government takes care of the rest?

Is an ARM the Hands-Off Mortgage Solution?

Keys noted that there is an “automatic transmission of monetary policy through adjustable-rate mortgage contracts.”

In other words, the ARM adjusts with the greater economy and the borrower doesn’t have to go out and refinance or lift a finger.

Their lender will just adjust their payment as the index changes, whether it’s up or down. Of course, lately it’s been a one-sided argument, with ARMs generally falling at the reset, instead of climbing.

This has actually led to debt reduction and new spending, with borrowers who selected ARMs choosing to pay down higher-APR like credit cards while also purchasing new cars.

Effectively, the economy was stimulated via these ARMs because it freed up cash for households to inject back into the economy through other channels.

Mortgage defaults in this group also dropped by some 36% thanks to the reduced monthly payment.

To summarize, borrowers with ARMs didn’t need to do anything to obtain lower payments, despite the fact that most probably assumed they’d have to refinance out of the ARM once it adjusted (higher).

At the same time, their neighbors with fixed-rate mortgages set at 6% were probably shaking their heads, wondering how they wound up paying more.

Additionally, they had to keep a close eye on interest rates to ensure they weren’t paying too much, and then make the decision to refinance or not. That meant a lot of work (and worrying), ironically.

Interestingly, Wharton researchers found that regions of the country that had more ARMs recovered faster during the Great Recession, saw more auto sales, and increased local employment.

Could the Opposite Happen?

The problem is ARMs can move both up and down, and everyone (including Wharton) expects rates to go up the next time around.

The big question is how things will play out when that happens. Will the borrowers who elected to take out ARMs get burnt and require a bailout?

Will home prices go down more in the areas where ARMs were more popular?

If so, might the 30-year fixed prove to be the winner it was expected to be prior to the most recent housing crisis? And as such, should it be left alone?

All to be determined…but there’s a good takeaway here. Monetary policy can dictate whether ARMs adjust higher or lower, so in that sense the Fed has the ability to provide direct stimulus to homeowners, without tax rebates or mass refinancing programs. That’s a pretty powerful thing.

But if homeowners keep opting for the 30-year fixed, it’ll be difficult for the Fed to do a whole lot, and these homeowners might just find that their mortgages are a lot more work than they expected.

source: thetruthaboutmortgage.com

Home Staging – Can It Make Your Property Sell Faster?

When someone comes to your home for a viewing, they make snap decisions in seconds, and even the smallest thing can put them off. Unfortunately, most homes for sale are quite lived in, whereas buyers want sleek show homes that don’t require any improvement. Luckily, there are things you can do to improve your home, and one way to do this is cheaply is through home staging.

What is home staging?

Home staging basically refers to setting up your home so it’s more appealing to buyers. It means removing things that are too personal, and creating a calm, serene environment that will appeal to visitors.

Remove clutter

Removing clutter is the number one rule for house staging, but it’s important not to go too far. Homes that have been completely decluttered look bare, and make it difficult to imagine what the place will look like when they move in. Don’t make the home too depersonalised. A few family photos are nice – dusty knick knacks are not.

Use appropriate furniture

Oversized or unsuitable furniture can make a room look smaller. Also, if you’ve got a spare room and there’s no bed in there, then it’s hard for people to imagine what the room will be like once furniture is added. If you don’t have the right furniture, then consider borrowing some, or even looking for some second hand bargains. You can always sell them on once the house is sold.

Use space effectively

Although you may have plenty of space, and have moved your furniture to suit your space, you may not be using the room effectively. Don’t be afraid to use the middle of the room when it comes to coffee tables and rugs. This draws focus to the centre of the room, and can actually make it feel more spacious.

A contemporary way to style your home is to pull some of the furniture away from the walls. Again, this creates a modern, spacious look, especially in large living areas.


Add natural light

If you have large furniture blocking the windows, or are using unsuitable window coverings then you may find there’s a lack of natural light. Unfortunately, there’s not always a lot you can do about these sorts of rooms, but luckily there are cash buyers who’ll buy any house quickly, no matter what its condition. If you don’t want to go this route, then consider adding a skylight or roof lantern to improve a room.

Make it cosy

Rooms that are staged should look pleasant and inviting. Add some colourful cushions, make sure beds are made up with blankets draped over the top, and add some finishing touches such as a vase of fresh flowers. This will make the house look inviting, as well as well looked after.

Staging your home doesn’t have to cost a fortune. It’s all about using what you already have and making the most of it. You can then show your home in its best possible light, and impress any potential buyers.

source: 20smoney.com

What You Need To Consider When Buying A Home

Buying a new home can be one of the most stressful things you do in your lifetime. You are forking out a lot of money for this place, so it has to be right on many levels. The whole buying process can be emotional from start to finish. The house search, the viewing, the phone calls and the anticipation of waiting for things to go through. It’s certainly not as easy as heading to the store buying something and that’s the end of it. So with that in mind, I thought it would be a good idea to share with you some of the things to consider when buying a house.
 
Putting the emotions aside can be difficult. But embracing them is just as important because your emotion will help you to make the right decision overall. It’s not an easy thing to do, buying a home. So cut yourself some slack and prepare yourself as much as you can. It can be a rollercoaster ride.

Location, location, location

One of the of first things you have to consider is the location in which you are buying your new home. It may need to tick a lot of boxes. What you have to consider are yourself and your family. So the location must be close enough for your to commute to your job. There Is no point moving far away as a long commute to work will only eat into your day. If you don’t drive into work, then you will need to find out whether the location has good transport links. 

Other factors to consider will be the local schools if you have children to think about. Do they have good reports? Are they close enough to get to? Sometimes it’s the more practical things we forget to think about. Things like whether there are supermarkets or shops close by. Perhaps local restaurants or entertainment. All of these things need to be factored in to decide whether the location is right for you and your family. Pinpointing the locality in which you want to search will make things much easier. It means that you know the place works, so when you begin your viewings, you only have to focus on the property.

Speak to an agent you trust

An estate agent is one of the people you will talk to most when it comes to buying a new home. So it’s essential you have confidence in them, and you feel you can trust them. This is the person you will speak to in regards to what you want out of a place. So you will trust their judgement when the provide you with options. You could get in touch with this office at Entwistle Green nor others like it. 

Having confidence in the people that will be helping you through this process is important. You are spending a great deal of money on this property. It’s an investment as well as a home, so it has to be handled right from start to finish. The process is already difficult enough without having people involved you don’t trust or have no confidence in. 

The type of property you need

Once you have decided on your location and made contact with some agents the next thing to do is decide on the type of property you want and need. The first thing to do is decipher the things you need to have. So this is the number of bedrooms you need as a minimum. Whether you require off road parking. If the house has a garden or yard. These are things that you can’t do without. The fundamentals. The next thing you then do is add the nicer details. An extra bedroom would be great, for example. Or a garage would be a nice bonus. Things like that. It’s important to communicate all of this with the agents looking for your property. They need to know what you must have and what you would like to have. This will make their search much easier. You also need to determine the type of property you want. You may only want a house, but you might consider a bungalow. Or perhaps you are looking for a more modern living arrangement so would consider an apartment. Ask yourself all the hard questions and if it is easier, make a list, so you stick to what you want.


Will you consider a project?

Another big question to ask yourself is whether you would consider a project or not. A project can be one of two things. It could either be something that needs a lot of work. Perhaps a complete renovation that may not allow you even to live in it before some work has taken place. Or it could mean something that requires modernising. That is totally liveable but just needs bringing up to date. Or if any of those are not an option then you need to specify that you want something that is done and ready. 

What you will find is that there will be a range of properties available. Ranging from the derelict to the pristine. You need to decide where your cut off point would be. The less work that needs doing, the more money you will pay upfront for the privilege. But there are other factors to consider. Things like whether you have the time, patience and funds in place to carry out any necessary work. Again it’s about asking how far you will go for the right place and communicating that to your agents. 

Have you got the financials in place?

The big money question is whether or not you have the finances in place to go ahead with a sale. Mostly this tends to be an agreed mortgage in principal, and your deposit saved up and ready. It’s a good idea to know all of this and have it in place before you begin your search. It will determine your budget and what you have to spend. However, it also means that if you do see something that will cost that bit more you can easily go back and ask whether or not you can stretch to it. 


Use your head as well as your heart

It is so easy to get drawn into the emotional side of things when it comes to buying a property. But this is where you have to reign yourself back a little. While the emotion will always determine whether or not you love a place or hate it. Your head will be able to tell you whether or not it’s the right decision or the wrong one. It can be easy to fall in love with a quaint cottage with a rose garden. But if it needs more money than you have spent on it then it won’t be the right place for you. 

Listening to both will be conflicting at times, which is why buying a new home will never be a snap decision you make. There are a lot of factors to consider. Some sensible and some emotional. But they are equally important to the decision making process. You also have to consider the other parties involved. You partner, or kids, for example. Will they like it, do they love it? Will they live there?

Be aware that the home search can take longer than you think

Searching for a new home can take longer than you think. It is very evident that it is rare to buy the first house you see. Unless you are lucky enough that it happens to tick every box. It may, at times, become a little soul destroying seeing place after place and none of them being quite right. But patience is important when it comes to buying a home. What you have to remember is that you are spending a lot of money. This place has to be right, the location, the type of property. It all has to work for you and anyone else involved. 

Try and enjoy the process and learn where you can. You will find that each viewing gets easier, that you know what you are looking out for. You will certainly refine exactly what you want as time goes on. It may take longer than you want it to, but it will be worth it in the end. 

I hope this helps you if you find yourself in the buying process. Keeping a level head throughout it all will be important. But making sure you are clear on what you want from the start will be the best thing you can do.

source: 20smoney.com

Where to Find Foreclosures

When the housing bubble burst in 2007 and more than six million families lost their homes, the pain was greatest in markets where lax lending standards (which have since been outlawed) were the most widespread. Florida, Nevada, Arizona, and California—the so-called “sand states”—led the nation in foreclosures.

What has changed since then?

Today, the foreclosure picture has changed dramatically. Last year’s number of 1.1 million foreclosure filings was the lowest annual total since 2006, the year the housing bubble began to burst.[1] The number of completed foreclosures in January 2016 was down 67.6 percent from the peak of 117,743 in September 2010.[2]

The geography of foreclosures also has changed. Today, Florida and California remain in the top five states for foreclosures. The five states with the highest number of completed foreclosures for the 12 months ending in January 2016 were:

1. Florida (74,000)
2. Michigan (49,000)
3. Texas (29,000)
4. California (25,000)
5. Ohio (24,000)
6.  

These five states accounted for almost half of all completed foreclosures nationally.

“In 2015 we saw a return to normal, healthy foreclosure activity in many markets even as banks continued to clean up some of the last vestiges of distress left over from the last housing crisis,” said Daren Blomquist, vice president at RealtyTrac. “The increase in bank repossessions that we saw for the year was evidence of this cleanup phase, which largely involves completing foreclosure on highly distressed, low-value properties.[3]

“Meanwhile, local economic problems became a larger driver of foreclosure activity in 2015,” Blomquist said. “Examples of this are Atlantic City, New Jersey, which posted the nation’s highest metro foreclosure rate for the year, along with several heavy oil-producing markets in Texas and Oklahoma where foreclosure activity increased in 2015, counter to the national trend.”

Foreclosure rates are on the rise in other areas

In 24 states and the District of Columbia—many of which missed the massive defaults seven years ago—there was an increase in foreclosure activity in 2015 compared to 2014. These included Northeastern states like Massachusetts (up 55 percent) and New York (up 24 percent), where home price increases have lagged and states suffering from the downturn in oil prices like Oklahoma (up 36 percent),) and Texas (up 16 percent). States with the highest foreclosure rates in 2015 were New Jersey (1.91 percent of housing units with a foreclosure filing), Florida (1.77 percent), Maryland (1.60 percent), Nevada (1.40 percent), and Illinois (1.26 percent). 

 

Among the nation’s 20 largest metro areas, six posted year-over-year increases in foreclosure activity in 2015: Boston (up 44 percent, St. Louis (up 38 percent), Dallas (up 25 percent), Detroit (up 22 percent), New York (up 9 percent), and Houston (up less than 1 percent).[4]

Metro areas with the highest foreclosure rates in 2015 were Atlantic City, New Jersey (3.43 percent of housing units with a foreclosure filing); Trenton, New Jersey (2.14 percent); Tampa Bay-St. Petersburg-Clearwater, Florida (2.03 percent); Jacksonville, Florida (2.02 percent); and Miami (1.98 percent).

What does this mean for you?

If you’re considering an investment in a foreclosure, you may no longer be limited to searching in areas that were hardest hit by the housing crisis. That may mean that you find a greater variety of foreclosures in more popular neighborhoods.

It may also, however, mean more competition. And when the process of buying a foreclosure is already so complex, more competition isn’t exactly welcome.

source: totalmortgage.com

How Accurate Are Local Home Sale Prices?

As you search for a home online, one of the more important statistics you’ll encounter are prices for homes that have sold recently in the area you want to live in. This is the best way to get a feel for the local market. In fact, identifying recent sales prices of “comparable” homes is basically how appraisers determine values.

How Sales Prices Work

Sales prices, sometime called closed sale prices, differ significantly from list prices, which basically represent only what the seller is asking for the house. Nor are they pending sales process or contract prices, which are the amounts sellers and buyers initially agree to but often change before closing.

Sales prices for individual homes that you see on real estate web sites come from brokers who report prices to their local multiple listing services rather than waiting for prices to be posted publicly at courthouses, a process than can take months.

But How Accurate Are They?

A new study has found that the prices consumers see on web sites were wrong an average of 8.75 percent of the time—in most cases higher than they should have been. The economists who conducted the study looked at 400 transactions in a Southeastern state from 2004 to 2008.

They compared prices from MLSs with the official prices and found that errors weren’t spread evenly over the time period but doubled in one year to more than 15 percent of transactions in 2006, when prices peaked and began to fall in the housing crash, followed by nearly as many errors in 2007 and 2008, when the crash accelerated. One example was 22 percent higher than the actual sales price.

How Do Errors Happen?

The timing of the errors suggested they were not random mistakes but were driven by marketplace conditions.

From the evidence, the authors of the study suggested two viable explanations for the market-driven error rates. The first was that some brokers intentionally inflated sold price information in the MLS, perhaps to make it appear that they negotiated a higher price for their clients.

“I don’t think agents were deliberately misstating prices, though that’s a story that fits the facts,” said Dr. Kenneth M. Lusht, one of the study’s three authors, in an interview. Lusht is Distinguished Professor of Real Estate at Florida Gulf Coast University.

“The second thing that could have happened, and it’s pretty likely, is that when you’ve got a down market, buyers get cold feet. They start thinking about not going through with the sale and giving up their deposit. So another story that’s consistent with what we found is that the price the broker submitted was the agreed upon price but between that the time he submitted it to the MLS and the settlement day the price was changed and the broker never changed the data because there is no incentive to do so.”

Whatever the cause of the errors, the study concluded, “Regardless of the motivation or source of the error, the result is the same—a misstated price.”

 The Bottom Line

More research is needed to confirm whether a real problem might exist and to measure its scope. Moreover, few markets today are falling at rates close to those of the period covered by the study, so at most errors are less frequent and less severe than those in the study.

However, in the meantime consumers relying upon sales data originating from multiple listings services should see if they can find other sources for sales that they are relying upon to set a sales price, price an offer or negotiate and final price.

source: totalmortgage.com

4 Reasons Buyers Need Their Own Agent

The old saying “no one has your best interest at heart except you” is often true, but in a real estate transaction it does not have to be that way.

In fact, buyers have an opportunity to sign a buyers agency agreement (it outlines the services provided by the agent, their compensation, exclusivity details, and how they will work on your behalf). It is logical to want to work directly with a real estate agent who can provide a wealth of information they otherwise would not be able to divulge to consumers.

Things like school district questions, neighborhood details, and even specific details about a property are all available to you under this arrangement. Your buyers agent clearly has your best interest in mind and will do everything possible to provide quality service while answering your questions as intimately as they possibly can. It is a win-win, because the more quality information you have available to you, the better home buying decisions you can make. The better decisions you make, the better chance you have of getting a great deal.

Whether you are a first-time, next time, or last time buyer, you want to know you are getting a good deal and will be safe, secure, and happy with the property you choose. All the more reason to do some upfront homework and choose an agent to represent you that has the qualities you are looking for.

Here are 4 reasons why buyers need their own agent when looking to purchase a home.

Market Knowledge

No one knows the local real estate market better than an agent! They are hitting the streets to check out the existing and new inventory, they have seen the neighborhoods, know which homes are likely to sell fast and those that may require some tender care to get under contract, they have a good understanding of the school districts, may know details about upcoming commercial construction in the area, and have a wealth of other information readily available to them.

While you may glean a few tidbits from the large national real estate websites, there is absolutely no substitute to discussing home details with an agent who has physically been inside the house and can tell you specific details about the property. Trust their market knowledge, and ability to discern what you need, to parlay that into a viable home viewing list.

Help with Hazards

While some buyers are very astute and have a keen attention to detail, many walk into a home with rose colored glasses on and fail to see some of the hazards that could end up being red flags or deal breakers. It is understandable you are excited and want to see if this house is “the one” and in doing so you may miss some of the finer points of the property.

Did you notice the roof, structure, and yard while walking up to the home? Your agent should be on alert to spot any imperfections or potential issues before you cross the threshold. Did you spot any leaks? Notice cracks in the floor, walls, or ceiling? You may have noticed all those things but chances are you were too busy checking out room sizes, trying to figure which room would be the office, determining if there was a place for your prized bar stools, helping the kids decide which rooms they may get, or you were mesmerized or appalled at the current owners “stuff”. No worries, an agent worth their salt should be pointing out all the intangibles so you can concentrate on the details important to you.

Your Own Representation

It is sometimes overlooked just how important this can be for buyers. Without your own buyer representation you are either being shown homes by an agent who legally cannot divulge information to you, or worse yet, you call the agent on the sign to see their listing. The listing agent works for the seller and will ALWAYS have the sellers best interest in mind, not yours. Remember, when you think you can get a better deal without having your own representation, it rarely works out in your favor.

The local agent is the local real estate expert so it makes good sense to utilize their expertise by getting their opinion about the area, crime, schools, each home you visit, specific pricing options, whether the property appears to be a good or bad deal, neighborhood nuances, and anything else that comes to mind. The point is, when you have your own buyer representation, you have an advocate in your corner who will share everything they can to help you make the best home buying decision.

Negotiation Power

This is one of the likeliest real estate areas where not having your own agent can cost you a lot of money. Unless you are skilled at determining which property imperfections or home inspection issues typically equate to a lower price, or know when the time is right to ask for additional assistance (i.e. closing costs, maintenance, updates, warranties, etc.), it is best to let a skilled agent handle this for you. Sometimes making a small concession in one area can reap big benefits overall, such as foregoing getting appliances updated and instead netting a lower sales price.

Agents will typically keep their emotions in check during the negotiations and may have additional insight about the home, listing agent, seller, or builder they can leverage to get you the best terms possible. Staying calm and collected reduces the likelihood of making a rash decision or snap judgement which could cost you in the long run. Getting the best deal on the home of your dreams is what you should be after!

Final Thoughts

In short, a buyer’s agent is much more than someone who just opens doors to let you view houses. They want to help you get a great deal, close quickly, and be happy with both their service and your new home. The better job they do on your behalf the more likely you are to refer them to your local sphere of influence and utilize their services again when you decide it is time to sell your home.

Whatever your reasons are for buying a home, there is no better option than working with your own buyers agent. Do your homework, choose a great agent to represent you, and begin the journey towards owning your own home. It really is that simple…happy house hunting buyers!

source:  totalmortgage.com

How to Tell if Your Local Real Estate Market Is Healthy

At its simplest level, real estate economics is a matter of supply and demand. Too few houses for sale to meet demand and prices rise. Conversely, if the local for sale inventory exceeds demand, prices will fall.

If supply and demand are in balance, though, prices will stabilize and homes will sell at prices closer to their true values without the unhealthy side effects of an unbalanced market—bidding wars and prices so high that they shut out first-time buyers or so low that they suck away equity from homeowners.

During the current recovery, rapidly rising prices have created bubble-like conditions, threatening some Western markets and raising the specter of the crash that contributed to the default of more than 5 million families.

Markets can change quickly, but it is not hard to tell when supply and demand are so out of balance that they create abnormal changes in the market that make it difficult for buyer or sellers.

Here some ways to assess a market’s health.

Rapidly rising or falling prices.

These are the symptoms that the market is out of balance and is causing damage to either sellers, buyers, or move-up buyers. Generally, an annual increase of 5 percent is a very healthy rate of appreciation.

Prices above that level and prices that are depreciating on annual basis suggest that they market is out of balance. Over the past three years, national average price has risen about 20 percent, according to CoreLogic.

Months’ supply.

Housing economists track the balance between supply and demand with metric known as “months’ supply.” It presents how many months it would take to use up the current supply of homes at the current rate of demand.  It takes into account current inventory, rate of replacement and the rate of disappearance. A six-month supply is considered healthy.

Time on market or days on market. 

This metric is simply the median time that homes are selling in a market. For a specific listing, it’s the number of days a listing is active in a multiple listing service before a buyer makes an offer that the seller accepts.

It is less accurate than months’ supply because MLSs reset the clock tracking time on market if the property is delisted and then listed again, often by another broker. “Time on site” a similar measure, also can be confusing since it measures only the days a listing has been on an aggregator site like Zillow or Realtor.com. It might have been listed on its MLS for s longer period of time than on an aggregator site.

When days on market exceed 90 days, it’s a good sign that either there is something wrong with the property or it is priced too high for the market.

List-to-sale, sale-to-list, or list-to-close ratio.

This is a sales metric used by real estate professionals to measure whether homes are selling more or less than the asking price in the local market. To calculate the metric, divide the actual sale price by the property’s final list price and express the result as a percentage. It can also be calculated using recent sales prices in a market.

Buyers, sellers and real estate agents can use the ratio to determine a strategy for price negotiation. A ratio above 100 percent means that it is a strong sellers’ market and homes are selling for more than their list price, suggesting mufti bid situations. If a home’s ratio is below 100 percent, the property may have had serious repair issues or was overpriced initially. When the ratio is below 100 percent on a market-wide basis, it suggests demand is soft and still softening, forcing owners to lower their prices after they listed their homes.

The bottom line? There are plenty of ways to get a feel for the housing market in your area as long as you’re willing to do a little research.

source: totalmortgage.com

Know your monthly amortization through this home loan calculator

MANILA, Philippines – If you’re wondering how much your monthly amortization will be for a home you’re looking to buy, you’ll find a home loan calculator very helpful.

A home loan calculator computes the monthly amortization based on your inputs on different variables like type of home, interest rate, down payment and loan term.

Below is a home loan calculator from mass housing developer Deca Homes. Deca Homes started building communities in 2002 in Davao and expanded to different provinces in Luzon and Visayas in a span of seven years. A mid-rise condominium, 8990 Tower is now in the works in the metro.

Deca Homes offers both in-house financing called CTS Gold Financing at 11 percent interest rate and Pag-ibig Fund home loan at 6.5 percent. Use the calculator below to find out not only your monthly amortization but also the type of home loan that will work best for you.

source: philstar.com

Getting a Mortgage in 2016? Here’s What You Need to Know

As recently as two years ago, only 17 percent of all applications for a mortgage to buy a home were approved.[1]  Approval rates have improved greatly since then for two reasons.

First, borrowers are doing a much better job of getting their credit, debt, and documentation in order before they apply.  Second, lenders have slowly relaxed some of the standards they use to approve applications.

As you gear up to buy a house in 2016, here are a few things you should know about the mortgage industry.



More Easing of Credit Standards

Mortgage lenders expect to continue easing their standards in 2016, according to a fourth quarter survey of major lenders by Fannie Mae.[2]  The findings show that during the first quarter of the year, 16% of lenders expect to ease credit requirements for loans that conform to Fannie Mae’s and Freddie Mac’s underwriting standards and for government-backed loans like FHA and VA.

Meanwhile, the percentage expecting to tighten standards dropped to 2%.  However, for other loan types, such as conventional loans, fewer lenders said they would ease loans over the first quarter.

FHA and VA loans are already significantly easier to qualify for than conventional loans.  For example, the median FICO scores for purchase loans approved in December were 688 for FHA, 706 for VA and 754 for conventional—a huge difference.[3]  Based on the Fannie Mae survey, look for that difference to increase in the months ahead.

Rising interest rates

While standards slowly improve, interest rates are expected to slowly worsen for home buyers.  Most forecasts have rates ending the year between 4 and 5 percent on a 30-year fixed rate mortgage.

Ironically rates have actually fallen when most experts expected them to rise in the wake of the Federal Reserve’s decision in December to rates for the first time in nine years.  Though they will probably be higher a year from now than they are today, they will still be very low compared to historic rates.

Down Payments 

While easier lending standards and slowly rising rates don’t greatly increase the cost of buying a home, down payment requirements aren’t going to change much either.

The average down payment in the first quarter of last year was 14.8 percent of the purchase price, down from 15.5 percent a year ago to the lowest level since Q1 2012. However, the average down payment in dollars for 3.5 percent FHA purchase loans originated in the first quarter last year was $7,609 while the average down payment for conventional loans backed by Fannie Mae and Freddie Mac was $72,590.[4]

One of the reasons the average down payment declined last year was the popularity of low down payment loans.  Loans with 3 percent or lower down payments accounted for 27 percent of all purchase loans in the first quarter last year, up from 26 percent in the fourth quarter and also 26 percent a year ago to the highest share since Q2 2013. Low down payment loans accounted for 83 percent of FHA purchase loans originated in the first quarter, while 11 percent of conventional loans were low down payment loans.[5]

First-time buyers should check out the thousands of low or no down payment programs sponsored by state and local housing authorities.  Check out Down Payment Resource for more information.

Mortgage insurance in 2016

Fannie Mae and Freddie Mac both launched 3 percent down payment programs a year ago and these have been extended through 2016.  However, like FHA, they both require mortgage insurance, which adds to the monthly cost of homeownership.

To encourage first-time buyers, last year FHA announced a 50 percent reduction in the monthly mortgage insurance premium.  All three of these initiatives are being continued this year.  More good news: in the waning hours of 2015 Congress extended the deductibility of mortgage insurance payments; at least for 2016, you will be able to deduct your mortgage insurance premiums from your federal taxes, just like you mortgage interest.

This tax provision only has a one-year lifespan, but Congress has extended it for the past few years though there no guarantee it will continue in the future.


[1] Ellie Mae Origination Insights Report, January 2014

[2] http://fanniemae.com/portal/research-and-analysis/mortgage-lender-survey.html

[3] Ellie Mae Origination Insights Report, December 2015

[4] http://www.realtytrac.com/news/home-prices-and-sales/q1-2015-u-s-home-purchase-down-payment-report/

[5] Ibid

source: totalmortgage.com

Are New “For Sale by Owner” Sites Changing the Rules?

When home prices rise steadily over several straight years, seller’s markets crop up where demand is strongest. One of the side effects is a renewal of interest among home sellers in trying to find a way to forgo the traditional six percent commission that real estate brokerages charge. Typically, that means marketing their homes on their own.

During the current three-year old housing recovery, however, there’s no sign that more sellers are going “FSBO”, or “for sale by owner.” Since 2012, sale prices have risen about 20 percent, according to CoreLogic.[1] In several of the hottest markets like Riverside CA or Los Angeles price increase are near or exceeding 10 percent in 2015 alone.[2]


Despite the strength of the recovery, interest among home sellers in going it alone has yet to materialize. According to the National Association of Realtors’ annual Profile of Home Buyers and Sellers, only 8 percent of sellers went FSBO in 2014, fewer than in 2013 and the smallest share since the association started collecting data in 1981.[3] But a lot has changed in 35 years and NAR’s survey may not be providing a complete picture of how the Internet may be empowering consumers to reduce the fees they pay real estate brokerages.

The traditional definitions of FSBO may mask a growing trend among many sellers to do more of the marketing themselves with the help of the Internet and brokerages using newer models.

Here are a few of the new ways people are saving when selling their home:

Auctions. Foreclosure auctions were a significant part of the real estate business four or five years ago and now online auctions have become an increasingly popular way for owners to sell their homes at a good price without having to wait for months. Sites like Auction.com and Hubzu.com offer incentives to buyers to buy their next home at an auction.

Discount brokers. There is nothing new about brokerages that offer their services at rates significantly less than their competitors. Most, however, provide less service for their lower prices. Redfin is probably the best known of a new breed of brokerages that gives buyers rebates and sellers commissions as low as 1.5 percent without reducing service.[4]

Owners.com gives buyers a rebate equivalent to about 1.5 percent of brokerage fees after the closing. The rebate comes from the 3 percent commission that traditionally goes to the buyer’s agent.

Fee for service/listing on MLS. During the housing boom that ended ten years ago, demand was so strong that many owners saw no need for a real estate agent with one exception—they wanted to list their homes on their local MLS. Dozens of brokerages went into business by simply listing homes for a flat fee of $500 to $1000 and not providing other marketing services, or providing other services for fixed fees.

 New online tools. Ten years ago the first web sites and online brokerages for FSBO owners created the first listing inventories of FSBO homes and distributed turnkey tools like yard signs and brochures. Today a new breed of sites has taken FSBO tools to a new level.

Sites like forsalebyowner.com and owners.com provide sophisticated advice and unique tools to help owners value their properties and price them properly. Owners.com provides a trend tracking tool that helps owners see priding trends down to the neighborhood level.

source: totalmortgage.com

How Much Equity Do You Have?

When people talk about housing being a good investment, they are referring to the profit that accumulates over time as home values rise. It’s called equity, and it’s easily calculated by subtracting the principal that you owe on your mortgage from the value of your home.

Your principal is easy to determine. Every month with your mortgage invoice, your lender sends you an accounting of the principal you still owe. Finding out what your house is worth is the tricky part.

Prices vs Values

Unlike other assets you own, such as securities or commodities, every home is unique. Location, condition, age, bedrooms, and lot size are some of the major factors that affect value. On the other hand, market forces like foreclosures, inventory shortages, or high levels of demand that create multi-bid situations have a huge impact on prices, but a limited impact on values.

Prices, like the numbers you see reported in the news, are from recent sales—only on about 3 to 4 percent of all single family homes in a given market. The other 97 percent of homes are also changing value based on market trends, but each home changes value at a different rate. Also, sales price reports cover large areas and hyperlocal trends resulting from the local factors like the construction of a new highway, the opening of a new shopping center or a rising crime rate are often below their radar.

Despite the old adage, houses are not necessarily worth what someone will pay for them. Lenders require appraisals to determine the value of a home and they limit the amount of the mortgage they will approve based on the appraisals.

Appraisers base their valuations on “comps”—recent sales of comparable properties. Sales contracts between buyers and sellers often are often higher than the appraisal, especially when sales prices in a market are rising, causing buyers to scramble for additional cash or risk losing their chance to buy the home.

At the end of the day, for the majority of buyers who finance their purchases, valuations based on appraisals rather than local sales prices determine what a house is worth

How to Determine Your Home’s Value

Web site AVMs. A number of sites offer services that give you a value when you enter your address. These are based on algorithms called “automated valuation models, or AVMs. Like any other computer model, the results they deliver are only as good as the data they access.

Try several of them. The results will vary by tens of thousands of dollars. AVMs are good for getting a start on valuing your home by giving a sense of the range that the actual value might fall.

More importantly, use the AVMs over time to get a sense of the direction that your home’s value is moving. Houses don’t change direction frequently—perhaps every 18 months or so. Discovering whether it is appreciating or depreciation help you anticipate its value months into the future.

“Big Data” Indexes. Using big data techniques, several real estate analytics firms have actually aggregated valuation data on as many as 100 million homes and developed statistical formulas based on repeat sales and comparable sales to update their valuations. These valuations are based on house-specific data rather than the computer models used by AVMs, so they may be more accurate.

However, even the best index can’t evaluate the condition of your house. Some valuation sites offer you the opportunity to alter your valuation based on condition, but it’s hard to assess how impartial owners are.

Appraisals. If you really want to know what your house is worth, the best way to find out is still to have it appraised by a licensed professional. If you are planning to refinance or to sell, a professional appraisal is worth the $500 or so that It will cost.

A tip: have your house appraised when you need the information, since appraisals begin to lose their accuracy in six months, or even less in volatile markets. Also, even if you have your own appraisal done, your buyer’s lender will probably order their own.

source: totalmortgage.com

Housing Market Predictions for 2016

In 2015, the housing market saw prices continue their climb from where they were a few years back. There’s no telling what exactly 2016 has in store for us, but there’s no denying it’s gotten off on the wrong foot.

Depending on who you talk to, the current problems are either a temporary setback or indicative of things to come. Covering both ends of the spectrum, here are a few things that may–or may not–unfold in the 2016 housing market:

Rising housing prices
Svenja Gullen, Chief Economist at Zillow, and self-proclaimed optimist believes that housing prices are set to rise 3.5 percent in 2016. That’s slightly down from 2015’s nationwide average of about 4 percent. Of course, local markets can vary drastically with their performances, and there will no doubt be cities that will outperform the national average. Denver, Dallas, Miami, Seattle, and Pittsburgh all seem poised to do just that. Zillow has the following as their top 10 housing markets for 2016:

    Denver
    Seattle
    Dallas-Fort Worth, Texas
    Richmond, Va.
    Boise, Idaho
    Ogden, Utah
    Salt Lake City
    Omaha, Neb.
    Sacramento, Calif.
    Portland, Ore.

Rent will go up

Rent.com released their 2015 Rental Market Report, and it doesn’t paint a pretty picture for renters. According to the report, vacancy rates are the lowest they’ve been in almost twenty years. That means demand is high, resulting in little wiggle room when negotiating the price of rent. It doesn’t help when property managers are eager to get after the benjamins, with 88% saying they raised their rent in the past 12 months.

The report also showed that 68% of property managers believe that rising rent will continue in 2016, with an average of 8%. Keeping up with constantly rising rent can be a battle when your income isn’t increasing at a similar rate, which is exactly what’s been happening.

Eager home buyers will continue to struggle

The NAR’s Housing Opportunities and Market Experience (HOME) survey shed some light on the desires of prospective home buyers in 2016. It showed that 94 percent of current renters who are 34 years of age or younger want to own a home in the future. Out of all renters, 83 percent said they have a desire to own, and 77 percent think that homeownership is part of their American Dream.

The inability to afford to buy was the top reason for not currently owning (53 percent), followed by the flexibility of renting as the second most popular reason (19 percent). Lifestyle decisions such as getting married, starting a family or retiring were cited as top reasons for shifting to owning at 33 percent, and improvement in their financial situation came in second at 26 percent.

The clear takeaway from all of this data is that people want to own homes, it’s just difficult to make the dream a reality–especially for young buyers. With wages barely rising and rent soaring, it can be incredibly difficult to put money away for a down payment. It’s particularly burdensome for borrowers who are already struggling with high student loan debt.

The economy will falter

Of course, there are some outliers that do not think the U.S. economy is as strong as the pundits and politicians lead everyone to believe. While most people are blaming foreign affairs for our recent domestic stock market troubles, a few are saying that the cause is actually the Fed’s decision to raise interest rates last month.

They claim that because the Fed’s free money is no longer propping up the markets, the economy is slowly sinking down to its true form. In this scenario, the Federal Reserve is forced to backtrack on its commitment to raise rates, and will ultimately have to cut rates. Home prices could take a hit if the situation got bad enough. This would be terrible news for homeowners. Will it happen? Unfortunately, we’re forced to wait to find out.

source: totalmortgage.com

Buying Your First Home in 2016? Start Now.

There are some very good reasons to buy a home in 2016. Mortgage interest rates are on the rise and leading economists predict that the longer you wait, the higher they will go, toping 4 percent by the fourth quarter. Home prices are also expected to continue their upward climb in the year to come, but at a slower pace than in 2015.

The State of the Real Estate Market

First-time homebuyers found the pickings to be slim for affordable starter homes in 2015, especially in hotter markers like Denver, Portland, Dallas, Seattle and much of California. Slim pickings in their price range kept thousands of potential buyers in rentals for another year. Will 2016 be any different?

New home construction is expected to improve considerably over last year as builders respond to rising prices. The will put the new-home market on track to reach 91 percent of its average norm by 2017, according to the National Association of Home Builders.[1] News homes are generally priced higher than first-timers can afford, but the new construction will still make a positive contribution to the inventory shortage.

More import is the outlook for existing homes. Supply of entry-level homes has been constricted by the unwillingness of current owners to sell and move up the housing ladder to a more expensive home, but that may change in 2016.

“Sales activity in 2016 will once again be primarily driven by the ongoing release of more pent-up sellers finally realizing their equity gains and using it towards the down payment on their next home,” says Lawrence Yun, chief economist for the National Association of Realtors. Yun predicts home sales will finish 2015 at a pace of 5.30 million and grow three percent next year to around 5.45 million.[2]

However, 2015 is ending with a question mark about the inventory outlook. Both NAR and Redfin reported that in October total homes for sale were down 4.5 percent from 2014[3] and NAR reported the inventor of unsold homes in October stood at a 4.8-month supply, below six months considered normal.[4]

When the spring season opens, one thing is certain. Inventories will be much larger than in the late fall, with fresh, new listings for sale. Again, the early birds will get the worms.

 How to Get Started

If you’re serious about becoming a homeowner in 2016, you need to be getting ready now. Here’s a checklist to get you started.

Get your credit in order. If you haven’t been managing your credit before, it’s too late to do much about big problems like bankruptcies or tax liens.  You should , however, still order reports from three top credit reporting agencies (Experian, Transunion and Equifax) to look for any errors or questionable calls that you might challenge. Here’s a list of credit do’s and don’ts:

Do:

    Pay all your bills on time
    Pay down as much debt as you can, especially smaller amounts on high interest cards. That will reduce your minimum monthly payments.
    Consolidate high interest credit card debt with a lower interest card or personal loan. Again, you will reduce your minimum payments, which lenders total to determine your debt-to-income ratio.

Don’t:

    Make any large purchases on credit.
    Open any new credit card or store credit accounts. Too much credit can be a negative and every time you apply for new credit, your rating takes a small hit.
    Cancel your oldest credit card. Lenders like to see a long history of good credit.

Get a down payment strategy. To buy a home, you will need cash for a down payment and closing costs, which roughly will come to about 3.5 percent of the total cost of your home. Of course, there are options to consider.

You don’t need 20 percent down for many mortgage options; the average down payment in 2014 was only 10 percent and among first-time buyers, only 6 percent.[5] That’s because most first-time buyers are using FHA financing these days to take advantage of its 3.5 percent down payment requirement. Look into your down payment options, including:


Down payment assistance with a low or no-down payment loan from a state or local housing authority. Feel free to contact us for information if you’re looking to buy a home in Connecticut—we’re kind of experts.

You can’t take out a loan for your down payment, but you can receive assistance from parents or relatives.

Both Fannie Mae and Freddie Mae initiated new loan down payment programs early in 2015. Fannie’s program is limited to qualified first-time buyers and requires a down payment as low as three percent and requires private mortgage insurance or other risk sharing.[6] Freddie Mac’s program also requires only 3 percent down but first-time buyers must complete a home education course, like Freddie Mac’s online CreditSmart course. Minimum credit scores for either program is 620.

You can qualify for a VA loan, which has no down payment requirement if you have 90 consecutive days of active duty service during war time, 181 consecutive days of service during peacetime, or 6 years of service in the Reserves or National Guard. You can also qualify if you are the spouse of a veteran who died in the line of duty, the spouse of a service member who is a prisoner of war or missing in action, or the surviving spouse of a disabled veteran whose disability may or may not have been the cause of death.
Get your documentation in order. Having your paperwork in order when you apply for a loan speeds the approval process along.

If you are emplolyed full-time, let your human resources office know that you plan to apply for a mortgage so that they will be ready to get you the right paperwork.

If you are self-employed, part-tine or seasonally employed or rely on income aside from full-time employment such as alimony, child support, royalties, sales commissions, dividends, etc. you will need documentation and at least three years of tax returns.

source: totalmortgage.com