Why are rates staying low?

It's no coincidence that rates are saying low?  Why?  Comments like yesterday are helping:

One point that stuck out in yesterday's speech from Fed Chairman Ben Bernanke was that the Fed must avoid raising interest rates too soon and urged the government to proceed cautiously in cutting spending and raising taxes.  Treasury Secretary Timothy Geithner also spoke yesterday, saying that it is still a "tough economy" for most Americans and that the unemployment rate will most likely tick up before moving lower.

New Reality of Weber County Home Values

I received two calls from Weber County clients of mine today. One client wants to list his home for sale and the other would like to refinance to take advantage of these crazy great rates we have right now.

Each received their annual real property valuation notices in the mail today. Each of the notices confirmed their suspicions: their homes values are lower today than they were a year ago. One by $20,000 and the other by $14,000.

For my future purchase of home client: They called me to discuss what to do if they can't get enough equity from the sale of their present home to buy their next home. I suggested a lower down payment on their next home and with the lower interest rates today as compared to 2 months ago, their future payment really was not such a huge shock after all. Panic averted. Plans move forward. Whew.

My refinance customer? Order an appraisal and see what happens with the value. That is the best and only option to consider. A $400 risk by ordering an appraisal through the current HVCC system to find out what the value of their home is. Again, I discussed additional options with them and we can find financing for them if their credit scores are good enough. I again reminded them that in the present mortgage world, it REALLY is all about credit scores! $400 investment to find out options to shave almost $200 per month in interest off of their payment? It was determined that the investment vs. risk of lost of the appraisal money was worth it. Potential interest savings is a huge motivating factor. And worth taking the chance on an appraised value.

It is that time of year again when real property valuation notices are mailed to property owners in Weber County. The question is often asked, "How does my assessed value affect my property tax?" The answer is, not in the way most people think.

At Home in Layton Grant Program

AT HOME IN LAYTON

From July 1st, 2010 through June 30th, 2011, or until funds have all been expended, Layton City will be offering the “At Home in Layton” program. 

The At Home in Layton program will offer Homeownership assistance to qualifying homebuyers.  Qualifying buyers must have certain household income levels (call or e-mail me for the income limits); household income limits vary with the number of persons in the household. 

The assistance will be offered as a grant that can be used for the up to 50% of the required down payment, closing costs or principal reduction. The grant will be offered in $5,000 increments and will be provided to the buyer's title company at the time of closing.

Sales tax on Real Estate Sales: Fact or Fiction?

Fact or fiction? The health-care law and real estate tax

By Benny L. Kass

Special to The Washington Post
Saturday, July 17, 2010 

 

Rumors are flying that the health-care legislation Congress passed this year will impose a sales tax on all real estate sales. But the rumors are based only partly on fact. Although there is a new tax, it will not apply to everyone, and existing tax breaks for home sales will remain in place.

The Health Care and Education Reconciliation Act of 2010, which President Obama signed into law March 30, is comprehensive and complex. Section 1402, "Unearned Income Medicare Contribution," imposes a 3.8 percent tax on profits from the sale of real estate -- residential or investment.

But the levy is aimed at high-income taxpayers, leaving most people untouched. And it will not take effect until Jan. 1, 2013.

Let's look at the facts of this new law.

First, it is not a sales tax, nor does it impose any transfer or recordation tax. It is called a Medicare tax because the money received will be allocated to the Medicare Trust Fund, which is part of the Social Security system.

Next, if your adjusted gross income is less than $200,000, you are home free. The income thresholds are clearly spelled out in the law. If you are married and file a joint tax return with your spouse, the law will apply only if your income is more than $250,000. (If you and your spouse opt to file a separate tax return, the threshold is reduced to $125,000 each.) For all other taxpayers, you have to make more than $200,000 to be covered under the new law.

The up-to-$500,000 tax-free exclusion of gain for married couples filing a joint tax return (or up-to-$250,000 for single taxpayers) has not been repealed, and the right to deduct mortgage interest and real estate tax payments has not been eliminated.

Mortgage Delinquency Rates?

As of July 1st 9.39% of mortgages are past due and 3.72% are in some stage of Foreclosure.  How does this measure up to history?  2007: 1% of all mortgages ended in foreclosure that year and this was twice as high as in 2006 (.5%).

Will there be more foreclosed homes coming on the market?  YES!  Will there be more great buys of short sale and Bank Owned Properties (REO's)?  YES!

Call your favorite Realtor today and talk to them about buying a home in this great market!  If you don't have a favorite Realtor, call me and I will refer you to a Realtor who will take PERFECT care of your Real Estate needs!

Rates to Remain Exceptionally Low: Bernanke

Bernanke's comments today are good for the Mortgage Market and are holding up prices at an all time high (rates remain at an all time low).  Remember, low inflation is good for mortgage rates, so is generally bad economic news (unemployment, low economic growth, troubled loans in the banking industry).  

Here's how the day played out with news from Bernanke's speech today:

2:32 PM ET - Many banks still have large volume of troubled loans - Bernanke.

2:13 PM ET - Bernanke: My colleagues on the Federal Open Market Committee (FOMC) and I expect continued moderate growth, a gradual decline in the unemployment rate, and subdued inflation over the next several years.

2:01 PM ET - Bernanke: conditions to warrant exceptionally low interest rates for an extended period of time. His prepared statement mimics last week's Fed minutes. 

9:17 AM ET - Mortgage Bond prices are being capped by the strong earnings reports this morning...Mortgage Bonds have a direct impact on home loan rates. As Mortgage Bond prices rise, home loan rates tend to move lower. They work in an inverse relationship.

REO sales outselling New Homes

New home sales are usually 20% of the market of homes sold and are currently at 11% (sales of homes so far in 2010), and REO sales (Bank Owned Properties) are at 19.50% of total homes sold, with 69.50% as resale homes (which includes short sales). 

With the excellent buys of REO and Shortsales, it is no wonder why sales are skewed in favor (at the expense of new home sales) of existing home sales. 

I read an article yesterday which made a good point about the shortage of homes and apartments which will be available once the economy turns around.  With the low number of building permits and new home sales right now, a shortage of housing looks realistic. 

Foreclosure filings are down!

For the third month in a row, foreclosure filings are down, down 2.8% from June 2010 and down 7% from 2009.

1/3 of residential sales last month were foreclosures and we are on track (according to Core Logic) to have 3.2 million foreclosures in 2010.  In a normal economy and market we would see 1-2% of sales in a month coming from foreclosures.

Credit Score Health in America?

Shocking news on American credit scores.

25% or 43.4 million Americans have less than a 599 credit score.  With 26 million out of work, this number of those with low credit scores could swell in the future.  With tightening of credit requirements for mortgages, credit card and insurance, the future looks tough (and more expensive) for many American's.

Strategic Defaults won't be an "easy out" anymore!

July 13, 2010
Amendment Bans Defaulting Borrowers
By Brian Collins

WASHINGTON-In passing a Federal Housing Administration reform bill, the House of Representatives approved an amendment that bans lenders from making FHA loans to borrowers who defaulted on their previous mortgage even though they had the capacity to make the payments. (Read further in this article to see what it does to borrowers ability to get Conventional loans). 
The FHA bill that was approved by a 406-4 vote directs the Department of Housing and Urban Development to issue guidance and standards that lenders will use to screen borrowers who may have been involved in a strategic default.
The main focus of the bill is to give the FHA mortgage insurance program more flexibility to adjust its premium structure and help rebuild the insurance fund's capital reserves.
The bill (H.R. 5072) also strengthens the agency's hand in getting lenders to indemnify the FHA for bad loans and to terminate lenders with excessive early default rates.
But in a surprise move, Republicans offered a motion to send the bill back to the House Financial Services Committee unless the House agreed to the strategic default amendment. The amendment was accepted and the House sent the FHA reform to the Senate.
More and more homeowners with negative equity are being drawn to the idea of strategic defaults as house prices show little sign of recovery any time soon.

First American CoreLogic reported that 4.9 million borrowers have mortgage debt that exceeds the value of their house by 25% and 14% of those borrowers are 90 days or more past due on their payments.

How does a Strategic Default effect borrowers ability to get Conventional financing?  Read on....

HomePath Mortgage is now available!

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Effective Date:  July 7, 2010

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HomePath^® Mortgage is utilizing to reduce their current inventory of REO properties.  This program is expected to help bring a positive impact to at risk neighborhoods, by helping prospective buyers purchase REO homes.  

Contact me for further details about this program and to search for properties. 

Benefits:

• No Appraisal Required
• No Mortgage Insurance
• Up to 97% LTV available for Primary Residence
• Up to 90% LTV for Conforming High Balance
• Up to 90% for second homes

Important items to Note:

• HomePath^® Renovation Mortgage is not eligible.
• Manufactured homes are not eligible.
• Condominiums are not eligible.

• Use of Down Payment Assistance for 97%  Flex programs is not allowed.

• Primary Residence or Second Home only. 
• Single Family residences and PUD’s only.
• 15-year or 30-year fixed rate terms only 
• Can not have mortgage or housing late payments in last 12 months.