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Is Now The Time To Buy A Home?
I have written about this time and time again and others are saying the same thing. “The very low interest-rate environment, along with a federal home-buyer tax credit, make a compelling case for many buyers to make a home purchase now and in the next several months, according to real-estate economist Ken Rosen.”
You need to take into account how long you plan to stay in or keep the home. If you are thinking about moving due to a job, etc. then now isn’t the time. Most importantly, don’t spend more than you can afford and make sure to have money left over after your purchase for reserves. You never know what might go wrong and you don’t have a landlord to pay for it anymore.
More Loan Modification Help
We will find out more today but the Treasury wants to monitor it more and increase the amount of modifications. Now if you are looking to get a modification and are reading this, don’t get too excited because we have seen this push before.
With delinquencies increasing I guess the theory is that they need to stop foreclosures. I personally think if you are going to do this then you need to go back to the Hope for Homeowners loan where you get a new loan based on 90% of the current appraised value and share the equity with the government. Unless you make it so the homeowner isn’t upside down you are postponing the inevitable.
If you have attempted to get a modification I am sure you have experienced this, “Mortgage companies have stepped up efforts to collect documents, but many borrowers say firms are frequently disorganized and ask repeatedly for the same paperwork or offer confusing information.”
http://online.wsj.com/article/SB125952206832568569.html#mod=todays_us_page_one
US Made Drywall Problems?
It looks like the Chinese aren’t the only one’s having problems with their drywall. The symptoms being reported are similar to those of the Chinese drywall.
I don’t know much about this but for anyone living in South Florida, I would make sure to take a look at this article especially since it’s from the AP out of West Palm Beach Florida.
http://www.msnbc.msn.com/id/34154003/ns/business-us_business/
Re-Default Rates
Citi Mortgage isn’t scared to show you what theirs are. It’s kind of scary and I hope more follow in Citi’s footsteps. Click on the link and take a look at the chart. It gets ugly 12 months after the modification. In my opinion they are just postponing the inevitable which could drag this recovery on even longer.
I could not have said this better myself, “I know many lenders have given borrowers extensions on the three month trial in order to get all the paperwork correct, but that has nothing to do with who has and who has not missed a payment. Look, maybe very few people have missed a payment, or fewer than we think, and the program is a huge success. We’d just like to know.”
Fannie Mae’s Stricter Guidelines
I wrote about this before when it was first release but the article was on CNBC so I figured I would refresh everyone’s memory. The change on December 12th is right around the corner and we need to be prepared.
They are tightening the debt to income ratio requirements to 45% and a maximum of 50% with compensating factors. This should have been done over a year ago but better late than never. In my opinion you should not go over 41% and preferably 36%.
Anyway, just as I said before, in the short term it will lead to less people being able to qualify for a home but homeowners and the economy will benefit in the long run. As I always say, not everyone should own a home and there is nothing wrong with renting.
A Couples $525k Of Mortgage Payments Erased
Wow, that’s all I can say. I guess we will see what happens when the bank appeals it but maybe this judge is trying to make a point. I don’t know the whole situation of this couples mortgage but a lot of people were put into loans that they never should have been. All parties involved need to take some blame but why doesn’t the mortgage industry hold banks and mortgage professionals accountable for what products they sell? They need to.
Anyway, it was an interesting story so I figured I would post it.
http://www.nypost.com/p/news/local/judge_kos_mortgage_to_slap_bank_28ZS1oW8Y58z6gu1AQbWMI
Fannie Mae To Level The Playing Field
This could be good news for a lot of first-time homebuyers and anyone looking to buy an owner occupied property. I know many of my clients who are purchasing in the $250,000 range or less, probably mostly $150,000 and less, are having a hard time getting their offers accepted because they are competing against investors and cash.
The Wall Street Journal reported that “Under the program, dubbed First Look, Fannie plans to consider offers only from potential owner-occupants and certain public-housing entities during the first 15 days in which a foreclosed home is on the market.”
The article describes what is happening to these buyers. “Many investors can move faster on home purchases because they are able to pay cash and don’t have to wait to qualify for a loan and get an appraisal. Investors often turn the homes into rental units or flip them to other buyers for a quick profit. People seeking to take advantage of the drop in housing prices to buy their first homes have been grousing that they often lose bidding wars to investors.”
It would be great if more people followed this. I will let you know as I learn more.
Home Prices Climb Again
For the 4th straight month. Whether I or anyone else believes that it will continue or not, it is good news for consumer confidence which came in higher than expected today.
No one can predict what will happen to home prices. We can certainly speculate and someone will always end up being right but we don’t know who that person will be today.
I personally think South Florida will see another 5-10% drop and many may disagree. Even with that being said, I still think now is the time to buy down here for certain people. The reason is because low interest rates can offset that decline and you cannot time a bottom. The best saying I have heard is that “it isn’t about timing the market, it’s about time in the market.”
Tax Credit Could Cause More Problems For FHA
Of course it might and this has been addressed before with the down payment assistance programs that FHA eliminated awhile ago. If someone needs the tax credit for the down payment it is most likely because they don’t know how to save money. Someone that can’t save money shouldn’t buy a home until they are able to.
The statistics speak for themselves and it was clearly shown that the delinquencies on the borrower who used the down payment assistance were much higher.
“The problem is that the FHA insures mortgages of homes below certain price levels with such a low down payment that it can be funded solely by the refundable tax credit. And, as we’ve seen in the recent housing crisis, buyers with no skin in the game are more likely than others to default on their mortgages when the value of their home falls below their mortgage balance.”
http://online.wsj.com/article/SB10001424052748704335904574497692260915588.html?mod=rss_opinion_main
What Are Your Options If You Are Upside Down On Your Home?
That is a great question and the article below from The Wall Street Journal addresses it very well. Seeing that 1 in 4 homeowners are underwater, the article can be very useful to many.
You can keep paying it if you can afford it, you can walk away by strategically falling behind on mortgage, do a short sale, or become a landlord.
The most interesting part to me was this. “Abandoning a home is said to be more acceptable with the younger set under 30, who don’t view satisfying the lender as the most important payment one makes. Brent T. White, an associate professor of law at the University of Arizona, continues to think it is OK to jump ship. He maintains that the government and other “social control agents” encourage homeowners to follow social and moral norms and “ignore market and legal norms under which strategic default might be both viable and the wisest financial decision.”
I am not sure age matters that much because I hear people talking about this in droves as though it is okay.
http://blogs.wsj.com/developments/2009/11/24/so-youre-underwater-whats-next/
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Miller on Mortgages 