What is Your New Years Resolution?

By Tom Gongaware

December

31

2010

As sure as a 1200 pound glittering sphere will descend on the Big Apple and a 1250 pound copper and steel “acorn” will drop in Raleigh, 2011 will arrive and compel us to come up with some New Year’s Resolutions. I take my New Year inspiration from James Brown…as nothing beats “Papa’s Got a Brand New Bag” for cleansing one’s palate on an annual basis. Then, I contemplate the top trending resolutions for Raleigh (found here) and pick a few. Why reinvent the wheel?
Now, if I were a 25-34 year old (if only), I’d be including “buy a home” among my 2011 goals. (After all, losing weight, getting a new job, and having clear skin all seem so cliché). Apparently, homeownership is not an unusual quest among that demographic…perhaps strongly encouraged by parents anxious to get the kid out of the basement. There are lots of benefits for the potential young Buyer…plentiful selection, increased affordability, low interest rates, and not having to share the bedroom with the hot water tank.
According to the 2010 Profile of Home Buyers and Sellers compiled by the National Association of REALTORS®, 25-34 years olds did comprise the largest group of Home Buyers in 2010 (36%). That figure has been pretty consistent the past few years. It also jives with a chart created by economist Tom Lawler that compares the number of under-35 year old homeowners with those 25-34 year olds living with their parents. While the number of those under 35 living with Mom and Dad has jumped up, the strong inverse relationship may suggest a pent-up demand among that demo for a home of their own in 2011.

So…if you’re between the ages of 25 and 34…buy a home in the New Year. There’s never been a better time. Then, come New Year’s Eve 2011, you’ll be able to play Charles Brown’s “Bringing In A Brand New Year” at full volume without disturbing the folks. Now that’s a resolution worth seeing through.

See What Others See: Pull Your Credit Report Annually

See What Others See: Pull Your Credit Report Annually
By Chris Cope
December
30
2010
As we near January 1st, we start to think about things we do at the beginning of each year, like making resolutions or changing the batteries in our smoke detectors.  This year, we are recommending you add one more thing to do at the beginning of each year and that is to review your own credit report.
Being in the mortgage industry, we see day in and day out the impact that a person’s credit can have on their ability to purchase or refinance a home.  While most people may know what they need to qualify, many don’t understand that even small positive changes to their credit score can result in a better rate.
Reviewing your credit report may also reveal errors that, thankfully,  you can easily correct.  What if you didn’t know those errors were there?  You don’t want to be caught by surprise, especially if you are making an application for credit.   After you review your report, you will see that the last pages give you the contact numbers for all your creditors. You can call them to dispute inaccurate information.  Since many industries also use your credit report information,  including insurance,  utilities and employers, it is in your best interest to know what is on this report and that it is completely accurate.
The only way to do this for free is to go to the Annual Credit Report Government site.  It allows you to get your credit report online or if you prefer to get it sent to you, here are the directions for requesting it by phone or mail (from the annual credit report site).
To Request your Credit Report by Phone:
•Call 1-877-322-8228
•You will go through a simple verification process over the phone.
Your reports will be mailed to you within 15 days. Please, allow 2-3 weeks for delivery.
To Request your Credit Report by Mail:
•Download the request form (You need an Adobe viewer to view the requested form. Download the free Adobe viewer)
•Print and complete the form
Mail the completed form to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Your reports will be mailed to you within 15 days. Please, allow 2-3 weeks for delivery.
By Chris Cope

Predictions for Housing in 2011

Predictions for Housing in 2011

Will housing values increase in 2011? Fortune.com offers both a bullish and a bearish prediction.

The bulls say: Affordability is at its highest level. Billionaire Warren Buffet is among those who believe this is a sign the slump is about to end. Buffet writes: "Prices will remain far below 'bubble' levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits."

The bears say: It’s not over yet. Housing is still overpriced and inventories are enormous, says Daryl Jones, an analyst at investment research firm Hedgeye. Jones warns that home prices could fall another 15 percent to 30 percent because no one is buying.

Source: Fortune.com, Nin-Hai Tseng (12/27/2010)

Housing Starts Predicted to Hit 3-Year High

Housing Starts Predicted to Hit 3-Year High

Housing starts will probably reach a three-year high of 739,000 in 2001, creating about 500,000 jobs and helping trim the unemployment rate to 9.1 percent, said David Crowe, chief economist for the National Association of Home Builders, in an interview with Bloomberg.

“This is an ugly economic cycle,” he said. “We need job creation to get people comfortable with buying a home. If they do that, we’ll create jobs that will reinforce that home buying and fuel additional job growth.”

Job growth in other sectors, as well as population growth, will also likely have an effect. The number of U.S. households will rise 0.7 percent to 118.7 million in 2011, the largest annual gain since the beginning of the housing crisis in 2007. Charles Lieberman, chief investment officer at Advisors Capital Management LLC in Hasbrouck Heights, N.J., expects jobs to rise by an average of 200,000 per month in 2011.

The CEO of luxury home builder Toll Brothers is optimistic. “The recovery is here to stay,” said Douglas Yearley. “I think 2011 will be an improving year, but I think 2012 will be a big year for us.”

Source: Bloomberg, Joshua Zumbrun and Kathleen M. Howley (12/28/2010)

Make Money in 2011: Your Home

Residential Market Outlook: Virtuous or Vicious?

Residential Market Outlook: Virtuous or Vicious?

Click on the link below to read the article. Great information:

 http://www.realtor.org/rmonews_and_commentary/Articles/2011/1101_2011outlook

Remember… Pigs Get Slaughtered

by Dean Hartman on December 23, 2010 ·

The recent spike in interest rates reminds us that though rates generally gravitate lower slowly, they move upwards “quickly and dramatically”.  For months, we have been listening to prospective home purchasers say they want to wait because prices will continue to fall and rates aren’t going up.  Well, my friends, the horse may have already left the barn.
Home loan rates have risen about ¾% since early November.  Why?  The biggest reasons are the Fed’s move to Quantitative Easing and a seemingly strong holiday shopping season has bolstered the fragile confidence of the public.  When confident in an improving economy, that public buys stocks and sells bonds to get the cash to buy those stocks.  To attract money back to bonds, bond traders raise yields (i.e., higher mortgage rates).
Let the volatility begin!
Now rates that were dipping below 4.5% are largely above 5%.  And because home buyers don’t really buy homes based on their sales price (they buy them based on the monthly payment associated with the home), this past six weeks has actually made it more difficult to buy a home.  In dollars and cents, it’s as if home prices went UP 6-8% to the buyer looking at their proposed monthly payment.  Buyers need to look in different neighborhoods now or compromise on doing some improvements because they need the cash they were going to use for that purpose to pay discount points to get the rate they need to qualify.
Conventional wisdom from the “experts” seems to believe that we have settled into a new range of rates.  Gone are the sub- 4.5% days, and welcome to a 4.75-5.25% market.  Now, let us not forget even that range of rates are LOW - historically speaking.  The primary uncertainty surrounds how long we will stay in this new range.  Some forecast this range will last through the spring, others don’t think we have that much time and even others believe we could stay here through 2011.  The real question is….Can you afford to gamble?
Just as home sellers who missed the peak in sales prices in 2006 regret their greed today, so, alas, will home purchasers of the future bemoan how they could have had a mortgage with a rate below 4.5% in 2010.  But, will they further curse themselves for missing rates at 5% too?  Only time will tell.
My advice to both consumers and loan officers is that if you have a rate you can live with….lock it.  There is a far greater risk of rates going up half a percent than a likelihood of them dropping back a quarter percent.  Pigs get slaughtered.  Don’t be a Pig!  Nobody likes or respects a Pig.

5 Reasons You Should Sell Today (UPDATED)

by The KCM Crew on December 21, 2010 · 3 comments

in For Sellers,Pricing

Selling your house in today’s market can be extremely difficult. It is for that reason that every seller should take advantage of each and every chance that appears. There is a fantastic opportunity available right now. Meet with your real estate agent and mortgage professional today and see whether it is the right time for you and your family to make a move.
Here are five reasons you should consider selling in the first 90 days of 2011.

1. Interest rates have spiked up.

Rates have jumped over 1/2 point in the last several weeks. The short term result of increasing rates is a surge of buyers jumping off the fence to purchase in fear that rates may continue climbing upward. This is a short window of opportunity. If rates fall again, buyers will jump back on the fence. If rates continue to rise, it limits the number of buyers who can qualify at each price point. Now is the best time to sell your house.

2. If you are moving up, you can save thousands.

If your family goal is to sell your current house and take advantage of the fabulous selection of properties currently available to buy the home of your dreams a at bargain basement price, DO IT NOW! Prices will continue to soften in most markets. However, if you are buying, COST should be more important than PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.

3. During the winter months, the buyers are serious.

We all realize that buyers are not quick to pull the trigger on the purchase of a home today. There is no sense of urgency with the supply of eligible properties at all time highs. However, at this time of year, the ‘lookers’ are either staying warm (in the North) or just busy with other priorities. The home buyers left in the market are serious and are more apt to buy. Less showings – but to more motivated purchasers.

4. You beat the rush of inventory that is coming next year.

Every year there is an increase of inventory which comes to market from January through April as homeowners put their houses up for sale in preparation for the spring market. Here is the number of listings available for sale in 2010.

• January – 3,277,000
• February – 3,531,000
• March – 3,626,000
• April – 4,029,000

We believe there is a pent-up selling demand (homeowners who have held off selling over the last year) that will lead to an increase in these numbers this spring. You won’t have to worry about this increasing competition if you sell now.

5. You have less ‘discounted’ inventory with which to compete.

This year, sellers of non-distressed properties have been given an early holiday present. With banks trying to rectify their foreclosure procedures, there has been a large supply of discounted properties removed from competition. No one knows how long it will take banks to return to the normal flow of foreclosed properties to the market. However, until they do, every homeowner has a better chance of selling their property.

Bottom Line

If you are looking to sell in 2011, there may not be a more opportune time than this right now. Serious buyers, great move-up deals and less competition from super-motivated sellers and foreclosures creates the perfect selling situation. Don’t miss it!

Existing-Home Sales Rise 5.6%

NAR: Existing-Home Sales Rise 5.6%
Existing-home sales got back on an upward path in November, resuming a growth trend since bottoming in July, according to the National Association of REALTORS^®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, rose 5.6 percent to a seasonally adjusted annual rate of 4.68 million in November from 4.43 million in October, but are 27.9 percent below the cyclical peak of 6.49 million in November 2009, which was the initial deadline for the first-time buyer tax credit.

Lawrence Yun, NAR chief economist, is hopeful for 2011. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” he said.

Yun added that home buyers are responding to improved affordability conditions. “The relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970,” he said. “Therefore, the market is recovering, and we should trend up to a healthy, sustainable level in 2011.”

The national median existing-home price for all housing types was $170,600 in November, up 0.4 percent from November 2009. Distressed homes have been a fairly stable market share, accounting for 33 percent of sales in November; they were 34 percent in October and 33 percent in November 2009.

Foreclosures, which accounted for two-thirds of the distressed sales share, sold at a median discount of 15 percent in November, while short sales were discounted 10 percent in comparison with traditional home sales.

Inventory Drops
Total housing inventory at the end of November fell 4.0 percent to 3.71 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, down from a 10.5-month supply in October.

NAR President Ron Phipps said good buying opportunities will continue. “Traditionally there are far fewer buyers competing for properties at this time of the year, so serious buyers have a lot of opportunities during the winter months,” he said. “Buyers will enjoy favorable affordability conditions into the new year, although mortgage rates are expected to gradually rise as 2011 progresses.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.30 percent in November from a record low 4.23 percent in October; the rate was 4.88 percent in November 2009.

“In the short term, mortgage interest rates should hover just above recent record lows, while home prices have generally stabilized following declines from 2007 through 2009,” Yun said. “Although mortgage interest rates have ticked up in recent weeks, overall conditions remain extremely favorable for buyers who can obtain credit.”

A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in November, the same as in October, but are below a 51 percent share in November 2009 from the surge to beat the initial deadline for the first-time buyer tax credit.

Investors accounted for 19 percent of transactions in November, also unchanged from October, but are up from 12 percent in November 2009; the balance of sales were to repeat buyers. All-cash sales were at 31 percent in November, up from 29 percent in October and 19 percent a year ago. “The elevated level of all-cash transactions continues to reflect tight credit market conditions,” Yun said.

Single-Family Homes Sales Jump
Single-family home sales rose 6.7 percent to a seasonally adjusted annual rate of 4.15 million in November from 3.89 million in October, but are 27.3 percent below a surge to a 5.71 million cyclical peak in November 2009. The median existing single-family home price was $171,300 in November, which is 1.2 percent above a year ago.

Existing condominium and co-op sales declined 1.9 percent to a seasonally adjusted annual rate of 530,000 in November from 540,000 in October, and are 32.2 percent below the 782,000-unit tax credit rush one year ago. The median existing condo price was $165,300 in November, down 5.5 percent from November 2009. “At the current stage of the housing cycle, condos are offering better deals for bargain hunters,” Yun said.

Here's a look at how existing-home sales performed by region:

Northeast: Existing-home sales in the Northeast rose 2.7 percent to an annual pace of 770,000 in November but are 33.0 percent below the cyclical peak in November 2009. The median price in the Northeast was $242,500, which is 9.2 percent higher than a year ago.
Midwest: Existing-home sales in the Midwest increased 6.4 percent in November to a level of 1.00 million but are 35.1 percent below the year-ago surge. The median price in the Midwest was $138,900, down 1.1 percent from November 2009.
South: In the South, existing-home sales rose 2.9 percent to an annual pace of 1.76 million in November but are 26.1 percent below the tax credit surge in November 2009. The median price in the South was $148,000, down 2.6 percent from a year ago.
West: Existing-home sales in the West jumped 11.7 percent to an annual level of 1.15 million in November but are 19.0 percent below the sales peak in November 2009. The median price in the West was $212,500, up 0.4 percent from a year ago.

—NAR

How to Prepare Your Home for Winter

By Wendi Hensel

December

21

2010

During the holiday season there are so many things going on (parties, events, vacations, etc). The hustle and bustle truly is setting in; however we still need time to ensure that you and your family are ready for winter. Little tips and chores that can help you prevent issues during the winter and also save you money on your energy costs can be shared by the whole family. Here are a few:

• Be sure that all smoke detectors, carbon monoxide detectors and fire extinguishers are in good working order. The batteries should be changed as needed or at least twice a year.
• Clean out gutters and downspouts (fine, fine, I’ll admit that I call for help on this one… I just don’t like to do it).
• Store firewood at least 30 feet away from your house.
• Check the attic for adequate insulation.  This is a great time to add insulation and receive up to 30% off the cost from tax credits. Energy Star offers detailed information on adding insulation and receiving the tax credit.
• As with other times of the year, make sure that the filters are cleaned or replaced regularly. This helps your heating and cooling system work more efficiently.  Believe it or not, I have been told that less is better when it comes to my filters.  The less expensive ones allow air to flow easier which reduces stress on the system.
• Have your heating checked by a licensed HVAC contractor. You would rather find out now if there are any issues than when it really gets cold.
• Make sure that there are no drafts coming from doors and windows and make repairs as needed.  My kids enjoy adding the weather stripping, with my guidance of course!  If they can do it so can you.
• Check for cracks and holes in the siding or paint and make any necessary repairs. Neither you nor I want critters coming inside to enjoy our warmth.
• My kids have also taken the garden hoses off the spigots to prevent them from freezing. This is a task that often gets overlooked so make sure to check before the cold truly starts to set in. There are also spigot covers available at home goods stores that are very inexpensive and add that extra protection.

Remember to ask for help during these busy times! There’s no need to try to tackle it all yourself.
What are some of your winter survival tips?

Fewer homeowners underwater in 3Q

But analysts cite more foreclosures, not improving home prices.

Associated Press

Posted: Tuesday, Dec. 14, 2010

The number of homeowners who owe more than their houses are worth fell for the third straight quarter this year.
About 10.8 million households - or 22.5 percent of all mortgaged homes - were in that position, called being underwater, in the July-September quarter, housing data firm CoreLogic said Monday. That's down from 23 percent, or 11 million households, in the second quarter.
But the decline came mainly because more homes had fallen into foreclosure - not because home prices had increased.
In a healthy housing market, about 5 percent of homeowners with a mortgage owe more than their homes are worth, CoreLogic's economist Sam Khater estimates. The firm does not have historical data before the third quarter of 2009.
The ranks of underwater borrowers will remain high - and likely will rise - because home values are expected to fall through mid-2011. About 2.4 million households hold only 5 percent or less equity in their homes, putting them near the tipping point if prices in their area fall.
Two-thirds of homeowners in Nevada who have a mortgage had negative home equity, the worst in the country. It was followed by Arizona, Florida, Michigan and California.
However, Nevada, Arizona, California and Florida also posted the biggest decline in negative equity, mostly because a high percentage of severely underwater borrowers in those states fell into foreclosure.
Oklahoma had the smallest percentage of underwater homeowners in the third quarter at 6 percent. Only nine states recorded percentages less than 10 percent.
The total amount of negative equity decreased to $744 billion nationwide, down from $766 billion in the previous quarter.

Read more: http://www.charlotteobserver.com/2010/12/14/1909261/fewer-homeowners-underwater-in.html#ixzz18NsOnreW

Negative Equity: Not Good But Improving

by The KCM Crew on December 15, 2010 · 

Back in October, we posted that falling home prices would drive more homeowners into a negative equity situation where their home was worth less than the amount of their mortgage (also known as the house being ‘under water’ or ‘upside down’). If a homeowner falls further into negative equity, it increases the chances that they will walk away from their mortgage obligation. This is known in the industry as a strategic default. This could dramatically increase the number of foreclosures coming to market and cause house values to fall further.
The Wall Street Journal reported on the impact of negative equity on strategic default:

Most defaults are typically driven by a combination of income shock and negative equity, or what’s known as the “double-trigger” hypothesis. While borrowers who lose their jobs but have equity in their homes can sell and avoid default, those without any equity are left with fewer options.

The most recent Fannie Mae National Housing Survey looked at how people viewed walking away from their mortgage obligation. Here are some of their findings:

• Underwater delinquent borrowers are the most likely to have considered stopping their mortgage payments.
• Delinquent borrowers are almost three times as likely to have considered stopping their mortgage payments if they know someone who has defaulted on their mortgage.
• 17% of all people who are delinquent believe the amount they owe on their mortgage is 5-20% more than the value of their home. That number jumps to 29% when they believe the amount they owe on their mortgage is at least 20% more than the value of their home.

The CoreLogic 3^rd Quarter Negative Equity Report released Monday showed

 … equity data indicating a third consecutive quarterly decline in negative equity for residential properties. CoreLogic reports that 10.8 million, or 22.5 percent, of all residential properties with mortgages were in negative equity at the end of the third quarter of 2010, down from 11.0 million and 23 percent in the second quarter. This is due primarily to foreclosures of severely negative equity properties rather than an increase in home values.

Obviously, the fact that the number is declining is good news for the housing market. However, with prices again falling there is concern that the current situation could worsen. Mark Fleming, chief economist with CoreLogic said

“Negative equity is a primary factor holding back the housing market and broader economy. The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity.”

Radar Logic addressed the CoreLogic report yesterday in an opinion piece:

According to research by CoreLogic, borrowers become more likely to default the further underwater they become in their mortgages. Thus, falling home prices could increase defaults, foreclosures and, as a result, the inventory of bank-owned properties. Based on our analysis, homes sold by financial firms sold for 38 percent less, on average, than homes sold by other sellers as of September 30, 2010. As such, foreclosed homes represent a low-priced alternative to homes for sale by owner/occupants, and as sales of foreclosed homes become a larger percentage of total sales, owner/occupants face increasing pressure to reduce their asking prices in order to compete. So falling prices could create a self-perpetuating cycle of negative equity, foreclosures, and further price declines.

Bottom Line

If people fall into negative equity, the chances they will strategically default increases. This would lead to more foreclosures which will mean more downward pressure on home values. More homeowners will see themselves in negative equity as prices fall. And round and round we would go. Let’s hope prices hold thus preventing this from happening.

Rates have been rising

Rates have been rising over the past few weeks and although they are still at very low levels (the mid to high 4 percent range) they have jumped ½ a percent.  This is the most significant consistent increase since the lows that we experienced in October.
Why has there been an increase you ask? Well, rates typically move on stronger economic news which we have had in the form of some resolution of the European debt issues as well as stronger indications in the US economy. Keith Gumbinger, Vice President of HSH Associates, state in a recent article on Marketwatch.com that,

“General improvement in the economy over the last couple of weeks has also had an influence on the rise in rates.”

What does this mean for you?
Purchasing power decreases as rates increase. If you are considering purchasing a home, keep in mind that there is a direct connection between interest rates and your price range for purchasing a home.
With the rates increasing, now may be a good time to review your options and lock in your interest rate if you still have not considered refinancing. While experts are not predicting a large increase in rates, they also are not predicting a return to the lows we experienced in October.

Demand for Housing Will Increase in 2011

by The KCM Crew on December 13, 2010

The last Pending Home Sales Index from the National Association of Realtors (NAR) showed a substantial 10.4% month-over-month increase. According to NAR the index measures:

housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.

This increase confirms a growing feeling that demand for housing has begun to increase.
Both NAR and Fannie Mae expect an increase in sales over the upcoming five quarters. Here are their projections:

 

Bottom Line

Sales will increase over the next several quarters. The increase will initiate a housing recovery. However, price increases will not take place until current inventory levels diminish. That could take 12-18 months.

Why You MUST NOT WAIT to Sell Your House

by The KCM Crew on November 23, 2010

The best real estate professionals are trying to convince anyone thinking of selling in the near future to correct the price on their home and sell now before the home loses even further value. Some cynical homeowners think the agent is just trying to create fear in order to make a quick sale. Some sellers are waiting until after the holidays. Some sellers are waiting until the ‘spring selling season’. Today, we want to say that your agent is giving you great advice - Sell Now!
We want to prove this is the best thing for you and your family. The most complete data available is usually generated by the local and national real estate associations. We realize that this data is sometimes considered suspect by the consumer (especially the cynics). For that reason, we will make our point without using any industry data generated by these associations. Instead, we will use the government agency Fannie Mae’s November Economics and Mortgage Market Analysis Report.
Fannie Mae forecasted median home sales prices for the next eight quarters. Their projections call for prices to fall and to not again reach today’s values until the 3rd Quarter of 2012 (see graph below). Remember, these are not real estate industry projections. These are government projections.

*The above graph and others will be available to KCM subscribers to print and use in your client presentation manuals in the December edition of Keeping Current Matters. If you’re not a KCM member, you can find other great visuals like this and much more by becoming a subscriber today.

Bottom Line

If you are looking to sell within the next two years, the highest sales price you will be able to attain for your home is its current value. Don’t wait. Take the advice of your agent and price it to sell today as the house will not increase in value in the short term.

Link to North Carolina School Report Cards

http://www.ncreportcards.com/src/

5 Predictions for 2011

5 Predictions for 2011
Freddie Mac analysts point to five features that they believe will likely characterize the 2011 housing and mortgage markets:

1. Low mortgage rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market. Thirty-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates of 5/1 hybrid adjustable-rate mortgages will likely remain below 4 percent in 2011.

2. Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.

3. Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.

4. Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.

5. Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings — known as the "seriously delinquent rate" — generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.

Source: Freddie Mac (12/09/2010)

5 Tips for Buying a Foreclosure

5 Tips for Buying a Foreclosure

By: G. M. Filisko

Published: March 29, 2010

Get prequalified for a loan and set aside funds, and you’ll be ready to purchase a foreclosed home.

1. Choose a foreclosure sale expert. Lenders rarely sell their own foreclosures directly to consumers. They list them with real estate brokers. You can work with a real estate agent who sells foreclosed homes for lenders, or have a buyer’s agent find foreclosure properties for you. To locate a foreclosure sales specialist, call local brokers and ask if they are the listing agent for any banks.

Either way, ask the real estate professional which lenders’ homes they’ve sold, how many buyers they've represented in a foreclosed property purchase, how many of those sales they closed last year, and who they legally represent.
If the agent represents the lender, don’t reveal anything to her that you don’t want the lender to know, like whether you’re willing to spend more than you offer for a house.
2. Be ready for complications. In some states, the former owner of a foreclosed home can challenge the foreclosure in court, even after you’ve closed the sale. Ask your agent to recommend a real estate attorney who has negotiated with lenders selling foreclosed homes and has defended legal challenges to foreclosures.
Have your attorney explain your state’s foreclosure process and your risks in purchasing a foreclosed home. Set aside as much as $5,000 to cover potential legal fees.
3. Work with your agent to set a price. Ask your real estate agent to show you closed sales of comparable homes, which you can use to set your price. Start with an amount well under market value because the lender may be in a hurry to get rid of the home.
4. Get your financing in order. Many mortgage market players, such as Fannie Mae, require buyers to submit financing preapproval letters with a purchase offer. They’ll also reject all contingencies. Since most foreclosed homes are vacant, closings can be quick. Make sure you have the cash you’ll need to close your purchase.
5. Expect an as-is sale. Most homeowners stopped maintaining their home long before they could no longer make mortgage payments. Be sure to have enough money left after the sale to make at least minor, and sometimes substantive, repairs.
Although lenders may do minor cosmetic repairs to make foreclosed homes more marketable, they won’t give you credits for repair costs (or make additional repairs) because they’ve already factored the property’s condition into their asking price.

Lenders will also require that you purchase the home “as is,” which means in its current condition. Protect yourself by ordering a home inspection to uncover the true condition of the property, getting a pest inspection, and purchasing a home warranty.

Be sure you also do all the environmental testing that’s common to your region to find hazards such as radon, mold, lead-based paint, or underground storage tanks.

More from HouseLogic

What you need to know about the homebuyer tax credit

How to claim your homebuyer tax credit

Other web resources

How to buy a foreclosure from Fannie Mae

What to consider when buying a foreclosure as your first home
G.M. Filisko is an attorney and award-winning writer who purchased a foreclosed condominium and found herself in the middle of a months-long dispute between the former homeowner and the bank over whether the foreclosure was conducted properly. Six months after paying the full purchase price, she was finally able to enter the property. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Impact of Rising Rates When Buying a Home

by The KCM Crew on December 10, 2010 ·

There has been much volatility in the 30 year mortgage rate over the last few weeks. According to Freddie Mac, rates have soared almost a half of a percent in just the last four weeks and now are as high as they have been in the last six months.
Frank Nothaft, vice president and chief economist of Freddie Mac, explained:

After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them.  Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-November.

No one knows for sure what will happen as we move forward. The only thing we know for sure is that rising rates have a tremendous impact on a buyer’s payment. There are home buyers standing on the sidelines waiting for the prices of real estate to bottom out. If you are one of these buyers, be careful. You should be as concerned about the monthly COST as much as you are concerned about the PRICE.
Below is a table showing the impact rising rates have on the monthly payment – even if prices continue to soften:

Bottom Line

You want the best value possible whenever you purchase anything. When buying real estate, the best value is not determined by price alone. Value is determined by price and financing costs. Take both into consideration when timing your purchase.

Mortgage-Interest Deduction is Safe Once Again!

December

09

2010

A Congressional committee was recently tasked with developing ways to lower our National deficit. Similar to past actions, the proposal was to cut significantly into the mortgage-interest deduction in order to free up revenue that could help bring down the deficit. Many in Washington see mortgage-interest deduction as “low hanging fruit.”
The good news is that once again that proposal has been rejected. Your Realtors® nationwide have been diligent in fighting this on behalf of all homeowners in America. I will tell you however that this is mostly not a dead issue and will come back once again.
Let’s be really honest here, you and I as home buyers and homeowners view the mortgage-interest deduction as a big incentive for owning a home. Each year, we are able to deduct our mortgage interest from our income tax bill. It is the single largest subsidy for housing in the U.S., and is projected by some to reduce tax revenue by $131 billion in 2012.
Because of the stand we took, I believe that we staved off some major consequences on an already sluggish residential real estate market. I predicted in a previous blog that the Carolinas hit the bottom in October and are hopefully moving upward from here on out. Taking away a major incentive, like the mortgage-interest deduction, would likely have brought down demand. We are still just too fragile for a move like that. In fact, the National Association of Realtors projected that these proposed changes would have pushed home prices down another 15 percent.
There are members of Congress who will not let this go in the future. Elimination of the mortgage-interest deduction would lead to huge profit for the government without impacting the tax rate card.   Join us and speak to your elected delegation and let them know where you stand. As you prepare your taxes this year, look at the deduction and imagine if it was gone.  It almost happened right under our noses.
The tax wars have only just begun and rightly so because we have out spent beyond our means.  Like we do at home, we have to reduce expenses; and as a government elected by the people, and paid for by the people, it should be examining ways to help taxpayers – many of whom are jobless or are dealing with decreased earnings – while also trying to fix its own massive budget woes. It’s not an easy situation. But let’s not forget the powerful force that housing is in the overall economic landscape. Until Americans have confidence in homeownership, the biggest investment that most of us have on this earth, this economy will go nowhere.  Yesterday we got one step closer to bringing that confidence back.

Insider Secrets To An Optimal Credit Score

Insider Secrets To An Optimal Credit Score

As you prepare to apply for credit (like a home mortgage) understand that it is significantly better to have your best possible credit profile BEFORE applying.  Working to improve your score during the mortgage process can be done, but there are two problems.  One, time to clear up items can become an obstacle when compared the time you are anticipating a closing.  And two, lower scores upfront can give an underwriter an additional reason to be uncomfortable with a file.  “Sooner, rather than later” should be the mantra of credit score improvements.  Here are some tested ways to do it:

Credit Cards – Revolving Debt proportions

1.       Look on the credit report for revolving debt (not installment loans, or “open” accounts)

2.       As a general rule of thumb, the balance should be no more than 30% of the credit limit.  So, if it’s more than that, have you should make every attempt to pay it down.

3.       If there are many revolving accounts with high balances, you will most probably need to pay down most or all of them for the best score.

4.       If there is nothing derogatory on the credit report, just high balances on revolving debt, you can often improve the score significantly.  But, if there are many derogatory items on the credit report, paying down revolving debt may not help the score very much.

5.       Many lender have software programs that can quickly determining for you which (if any) revolving accounts need to be paid down, and to what balance.

Collections/Judgments:

1.       Paying off or satisfying such a derogatory account does not normally improve the score because the derogatory account still exists, and so still hurts the score.  In fact, paying off an old collection may even make the score drop.

2.       However, for collections, the borrower can ask for the account to be completely removed or deleted.  If you have not yet paid the collection, you can use that as a bargaining chip.

3.       If there are many collection accounts, removing just 1 or 2 may not do much good.  You always need to look at the overall credit picture.

4.       Charge-off accounts behave a little differently than collections.  You can sometimes gain points by paying those off.

5.       Your lender likely has a What-if Simulator to experimentally see what affect removing an account has on the score.

Late Dates

1.       When you look at the overall credit report and you see LOTS of late dates, especially ones from within the last year, there is not much you can do to help the score…those lates simply need to drift into the past.

2.       However, if you just see 1 recent late date on 1 account, and just 1 other recent late date on another account, you should call those creditors and ask…beg…for those single late dates to be removed as a courtesy.  It may also be that the late dates were a mistake, but don’t push the creditor to admit to making an error.  Just ask them to remove it as a courtesy since you have an otherwise perfect payment history with that creditor.

3.       Your lender can use the What-if-Simulator to experimentally see what affect removing a late date has on the score.

Authorized User Accounts-removing or adding

1.       Piggybacking on someone else’s account can help or hurt your score.

2.       If that account has recent late dates, you can most probably improve the score by having the actual account holder remove you as a user.

3.       If the account is a revolving credit card and it’s “maxed out,” you might also improve the score by removing it, but only if you will still have other revolving credit cards on your report.

4.       What about adding someone as an authorized user to a credit card?  This may help, but the better course of action is to get the actual card holder to make it a joint account with you.  This guarantees that the account will show up on the credit report within a month or two.  But be careful…the account should have a lot of history, no late dates, high credit limit, and low balance.

Other things to help

1.       Keep old revolving credit cards open…don’t close them.

2.       Regularly check your credit report to catch errors early.  You get a free one each year from each bureau.  Go to www.annualcreditreport.com.  Don’t do all 3 bureaus at the same time…space it out throughout the year.

3.       Learn more about credit from websites like www.myfico.com and to get addresses to write the bureaus.

While I trust that some of your questions were answered in this blog, I bet many questions were also raised about your individual circumstance.  Credit Score Optimization is one of the central reasons why you should engage the expertise of a good loan officer right NOW.

Fixing Your Home with Ease

December

08

2010

In a few months, I will have lived in my home for 10 years. I bought it in an up-and-coming neighborhood with good schools. My kids are growing up here. Like many homeowners today, I have no plans to move anytime soon. I love my house and my neighbors, and I am content to stay put, at least for now.
My home obviously knows this, because it’s been extra “needy” lately. In the past year, I’ve needed the services of a plumber (3 times), a handyman, a painter, a lawn care company and a carpet cleaner. I’ve also purchased three new major appliances; pressure-washed the exterior; and had my HVAC system cleaned and examined.
I’ve spent a lot of time finding these vendors, asking friends for referrals and in a few cases, selecting someone because I heard their radio or television ad. In most cases, I’ve been pleased with the results, but the unqualified handyman is what resulted in the three visits from the qualified plumber, and the verdict is still out on the lawn care guy.
As a busy working parent, I don’t have time to spend researching quality service providers for my home maintenance, repair, renovation and remodeling needs.  But Allen Tate Home Services could have saved me a lot of time and trouble.
Allen Tate Home Services partners with local, quality service providers in just about every trade area, from heating and air, to landscaping and plumbing, to handyman services for my “honey do” list. These professionals are licensed and insured, and must maintain a 95 percent satisfaction ranking from their clients.
And the best part? I can find professionals whenever it’s convenient for me, via their new website, homeservices.allentate.com. A quick search returns results of all service providers in my local area that perform my requested service. It allows me to contact them directly via telephone or e-mail. If I need a specialty service or extra help, Allen Tate Home Services also offers personal assistance.
Some service providers even offer coupons or special discounts. And it’s always nice to make your money go a little further in today’s economy.
It’s tough to keep up with everything it takes to maintain a home. That’s why I also signed up on the website for Home Notes, a monthly e-mail newsletter. Near the beginning of each month, I receive this great publication that helps me better understand the “needs” of my home and what I can do to help keep it in top condition. I particularly like the checklists, which remind me of things that should be done that month.
Hopefully, my home will be less “needy” in the New Year. But when it needs some extra attention, I’ll know who to call first – Allen Tate Home Services.

Forbes: Housing Had a Superb Decade

Forbes: Housing Had a Superb Decade

by The KCM Crew on December 8, 2010 · 0 comments

in For Sellers,Pricing

Has real estate been a good investment over the last decade? Many people would be quick to answer ‘no’ to that question. However, they would be wrong. Real estate prices in this past decade have appreciated nicely despite the challenges over the last four years.
Forbes.com reported on this issue two days ago:

With all the teeth-gnashing over the real estate bubble, the bust and the mortgage mess, you can be forgiven for failing to notice this little tidbit:    Housing had a superb decade.

According to Radar Logic, the value of a square foot of housing in the U.S. is up 58% from its January 2000 level. That represents an average annual gain of 4.3% in the value of one square foot of housing. According to the Case Shiller Pricing Index, home values are still up 34.9% over 2000 prices.
[Read full article...]

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You Tube Video:
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Virtual Tour:
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