Archive
Home Improvement Costs Are Down
The whole US is on sale. It doesn’t matter what you are buying, most things are cheaper today. This is a good thing seeing as many of the homes people may buy, especially in South Florida, are foreclosures and short sales that need work. A lot of the properties need some work. This is partly why you are buying the home at such a large discount. Make sure you get a good home inspector to check EVERYTHING because you don’t want to get hit with “hidden costs” down the road.
This is also nice for those who want to stay put in their homes and they are outdated. Now is the time to do the work. It is also a great time for preventive maintenance. It’s almost like going to the dentist every 6 months, it costs you less in the long run.
“Depending on the region and the job, some homeowners are paying as much as 20% less for home-remodeling projects than they would have a few years ago. Many contractors are willing to accept smaller jobs and “handyman” projects that they used to snub. And more projects are being delivered on time and on budget—a stark contrast from the boom years.”
http://online.wsj.com/article/SB10001424052748703790404574471683619819154.html?mod=rss_PJ_Main
Tax Credit’s Tentative Extension
This is good news but it is still unclear how it will be brought to the Senate floor.
According to The Wall Street Journal “Senate negotiators reached a tentative deal to extend a tax credit for first-time home buyers, but its passage remains uncertain. The agreement would extend the existing credit for first-time home buyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners, Senate aides said. The reduced credit would be available to all home buyers who have been in their current residence for a consecutive five-year period in the past eight years.
The credit would be extended from its current expiration date of Dec. 1 to all contracts entered into by April 30, and closed before July 1. It is expected that income limits on people claiming the credit would be increased to $125,000 for singles and $250,000 for couples, from the current $75,000 and $150,000, aides said. The credit phases out for people making more than those amounts.”
http://online.wsj.com/article/SB125678511901015147.html?mod=rss_PJ_Main
Home Price Data
It is amazing how you can play around with numbers. You could view today’s Case-Shiller Index release as good or bad.
CNN reported that “Prices in the S&P Case-Shiller Home Price index of 20 cities rose a non-seasonally adjusted 1.2% in August. It was the fourth consecutive monthly increase and followed a 1.6% gain in July. Prices were down 11.3% versus August 2008, but that drop was less severe than expected. Analysts surveyed by Briefing.com had forecast an 11.9% year-over-year drop.”
Whether prices are increasing or decreasing month over month or year over year, it all depends on where you live. In South Florida, things seem to be stabilizing with all of the first-time homebuyers, cash offers, and bidding wars going on.
Delays Getting Your Tax Credit
This should come as no surprise considering a lot of talk about fraud. The article below shows the 3 reasons for the holdups.
#1 – The IRS lost some returns, WOW.
#2 – Some people are getting too much money
#3 – Fraud
“That’s true whether you plan to claim the credit on your 2009 return, or you’ve amended your 2008 tax return to get your refund sooner. Either way, get ready to wait. TaxMama has been hearing from people whose amended returns were filed as far back as June or July who are still waiting for their money.”
They are reviewing everything a lot closer now. Here is a good tip:
“If you’ve been waiting on your refund for more than six weeks and have not heard from the IRS, call them now at (800) 829-1040. Have them find the group that is working on your original or amended tax return. Get the group number and address and send them all the proofs of purchase they could possibly want, to speed up the process. (Or if they can’t find your return, see solution to Problem No. 1, above.) Send the information by certified mail, and make sure it’s received.”
Homeowners Going To Court Over Loan Modifications
This to me reminds me of mortgage professionals, you can always find someone who will tell you they can get you a mortgage. The same seems to be holding true for those homeowners who hire attorneys and are taking their mortgage servicers to court because they “deserve” a loan modification.
I know the process can be very frustrating and many feel they aren’t getting the help but do they deserve it? Correct me if I am wrong but don’t you have to sign a Note at closing agreeing to repay a loan based on certain terms? You sure do. I think, for the most part, the only people who really deserve help are those who lost their jobs or took large pay cuts.
The problem is that everyone thinks they deserve a modification and the banks are so backed up. Many who don’t deserve them have gotten help I am sure.
The Wall Street Journal reported that “Later this month, the administration will begin requiring mortgage servicers to provide borrowers with more specific information as to why their modification request was denied. It has also ordered the companies to create an appeals process.” Now that makes a little bit more sense. We will see.
http://online.wsj.com/article/SB125632363251004357.html?mod=rss_Politics_And_Policy
South Florida Median Home Prices
The South Florida Business Journal reported today that in 2002, the median price for a single-family home in Miami-Dade County was $183,000, while in Broward County, it was $211,000. Today, the median prices are $182,000 and $192,000, respectively, according to residential brokerage Esslinger Wooten Maxwell (EWM) Realtors.
The median price for a Miami-Dade condominium in 2002 was $133,000, while Broward’s median clocked in at $103,000. Seven years later, the Miami-Dade median is $135,000 and Broward’s is $80,000.
Wow, need I say more. Here is another staggering statistic from EWM, 48% of their deals are cash in Miami-Dade and Broward markets. That is huge considering The Wall Street Journal reported it was around 22%.
Can prices really go lower? Of course anything is possible in this market especially when there is still a large about of foreclosures that haven’t hit the market. Just like any investment, if you hold for the long term you will get a good return on your investment.
http://southflorida.bizjournals.com/southflorida/stories/2009/10/26/story10.html?jst=pn_pn_lk
More On The Tax Credit
I believe the saying is that one person can ruin it for everyone. Well, that is what could be taking place with the tax credit. I wrote a post earlier this week about the fraud that is going on with the tax credit. “Tax officials said tens of thousands of people submitted suspicious claims for the first-time home buyer tax credit. Congress is weighing steeper documentation requirements if it extends the plan.”
This makes it very hard for anyone to determine how much the tax credit has stimulated sales of homes. The largest amount of the fraud is coming from people who state they haven’t owned a home but really have. This comes as no surprise to me because I get calls all the time from people who either don’t know or are trying to figure out a way to get it.
“The problems are potentially troublesome for backers of the credit – including real-estate agents, home builders and mortgage bankers – who want Congress to extend it and expand it to all home buyers, not just first-time buyers. The credit is set to expire on Nov. 30.”
http://online.wsj.com/article/SB125622884824101553.html?mod=rss_Politics_And_Policy
FHA Condo Update
FHA cannot seem to make up their mind when it comes to their new condo rules. They were supposed to go into effect on October 1st, 2009, then changed to November 2nd, 2009, and now are pushing it back to December 7th, 2009. Here is what they had to say:
“Implementation of FHA’s new policy guidance for condominium project approval and condo unit financing will be delayed until December 7th 2009. The new guidance, to be issued within the next two weeks, will: 1) offer additional leniencies to address the difficult market conditions and 2) augment some portions of FHA Mortgagee Letter 2009-19, providing additional information and clarification.
Until the new guidance takes effect on December 7th, 2009 lenders may continue to use the Spot Loan Approval guidance issued in Mortgagee Letter 1996-41. Further, the site condo and manufactured housing condo project changes that have already been implemented are not affected by this delay.”
To read FHA Mortgagee Letters 1996-41 and 2009-19 please visit:
Interest Rate Update
It is hard to keep up with interest rates even for me and I am in the business. Interest rates can change multiple times a day in this volatile environment. As I am sure you have seen or heard, interest rates are at historic lows. Every Thursday Freddie Mac releases their average fixed rate for the week ending. What many seem to miss, or they have selective reading, is that it is the AVERAGE for the week ENDING.
The bottom line is that rates are low and there is no telling how long they will stay this low. In the release of the FOMC minutes last week there was a lot of discussion whether or not the Fed will increase their purchases of mortgage-backed securities which is set to end at the end of the 1st quarter of 2008. Don’t believe everything you read, work with someone who understands what moves rates and watches it on a daily basis, don’t be greedy and get your rate locked in, and never look back.
”While rates have been low for most of the year—particularly since falling below 5% in September for the second time this year—one big question looming is what happens to those rates once the Federal Reserve slows, and ultimately stops, its debt purchases from Fannie Mae and Freddie Mac. At a congressional hearing on Tuesday, MBA Chief Economist Jay Brinkmann said that the “most benign estimates are for increases in the range of 20 to 30 basis points” but that some estimates of potential increases “are several times those amounts.”
http://blogs.wsj.com/developments/2009/10/21/mortgage-rates-rise-slightly-some-see-big-jumps-coming/
Mortgages Being Fixed For The Elderly
This article makes me sick to my stomach and banks should be reducing the principle balances for the elderly who were put in Option Arms and putting them into a reverse mortgage. An Option Arm is where the borrower had 4 choices for a payment; minimum payment which didn’t even cover the interest, interest only, 30 year, and a 15 year payment. It does adjust and if the minimum payment is made the amount you owe will go up because it doesn’t cover interest.
Just as a Financial Planner must do what is best for their client and a lot has to do with age, mortgage professionals (I am using that term loosely) should be held to the same standards. The Option Arm could have been a good product but it was used incorrectly and everyone was selling them because they could make so much money off of them. In the defense of some mortgage people, it wasn’t so much they were taking advantage of these people it is more that they just didn’t understand how they worked. The banks that came out with the product did understand them and should have done more to prevent certain people from obtaining them. In my opinion the product was meant for investors, self-employed, and commission based employees. I guess maybe if property values kept going up no one would have ever said it was bad but we will never know.
“Mr. Garcia owed about $490,000 on his home, which a recent appraisal said is now worth only about $150,000. Bank of America wrote down about $405,000 of the loan. To account for the rest, the bank then issued a reverse mortgage for about $85,000. But instead of paying that amount to Mr. Garcia, as is usual with a reverse mortgage, the bank paid the proceeds to itself. A reverse mortgage is a form of equity loan available to older homeowners that generally doesn’t need to be repaid until after the homeowner dies. That means Mr. Garcia can remain in his home without having to make mortgage payments to Bank of America. (Mr. Garcia is making small monthly payments on a second mortgage that was modified by another lender.) When he dies, the house reverts to Bank of America, and his heirs can choose to buy it back for the $85,000 plus interest and fees. Or, if the heirs choose to walk away, the bank can sell the house, and any proceeds above the loan amount would go to Mr. Garcia’s family.”
http://online.wsj.com/article/SB10001424052748704112904574477261964054646.html?mod=rss_Money
MillerOnMortgages
- An error has occurred; the feed is probably down. Try again later.
Miller on Mortgages 