http://www.realty.com/ en kate@realty.com Copyright 2009 2009-01-07T17:26:00-05:00 http://www.realty.com/blog/homeowners-jittery-on-oil-prices-slight-boost/ http://www.realty.com/blog/homeowners-jittery-on-oil-prices-slight-boost/#When:17:26:00Z How gas prices on the rebound can affect the mortgage market Yesterday, the U.S. crude dropped to $48.58 per barrel that became a source of minor relief for Americans. However, the feeling may not last too long as the past week already demonstrated price increases by cents. Monday’s price was at $48.81 as tighter supply puts pressure on the cost. Analysts have warned that the 5-month dive in gasoline prices has finally reached bottom and is likely to get back to higher levels this year. Last month was a hit for drivers when oil was only valued at $33 per barrel. Last week wholesale gasoline prices were up by 40 percent which is a sign that many perceive to be an imminent trend leading to last July’s peak numbers. Among the reasons for the recent price rise is the gripping tension between Israel and Gaza. The market reacts very strongly to political situations and the OPEC easily cuts production to match increasing demand. These add pressure to oil price hikes and consumers have always been at a disadvantage. John Porreto of Businessweek reports, “Some analysts say oil could eventually eclipse $150 a barrel, maybe even on its way to $200. In such a scenario, gasoline would easily cost more than the record high of $4.11 a gallon set last summer. Oil trades at about $50 today.” Homeowners struggling with their mortgage payments have been beaten too much by the soaring oil prices last year. That meant cutting back on their expenses, fewer road trips and diminished savings. And unknown to many, oil has its other effect in the mortgage industry too. Holden Lewis of Bankrate.com cites financial analyst Harvey Hirschhorn four years ago, “The bond market furthered its recent trend of moving in lock step with oil prices: Higher oil prices, lower yields; lower oil prices, higher yields…Higher energy prices could add fuel to inflation, too—and rising prices would put upward pressure on interest rates.” In other words, middle and low-income Americans are burdened by paying for commodities that are priced higher because of more expensive transportation costs. It lowers their savings and curtails their normal consumption of goods. This would slow down the economy and therefore mortgage rates will rise to counter higher risks from borrowers. Today’s low mortgages do not somehow reflect the reverse of this theory since the government has exerted influence in the mortgage industry to artificially affect rates. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services.  Follow the Realty.com blog for up to date housing news and trends.  And monitor local mortgage rates at RealtyGadget.com. 2009-01-07T17:26:00-05:00 http://www.realty.com/blog/are-pmis-low-income-earner-friendly/ http://www.realty.com/blog/are-pmis-low-income-earner-friendly/#When:21:50:01Z The credit crisis sends fears among insurers. For years, borrowers have relied on private mortgage insurers (PMI) to secure lower down payments for their home purchases. Lenders on the other hand are protected from losses out of defaults by guaranteeing payments not made by the borrower. These can include carried-on interest from delinquent payments, broker’s fees, maintenance and repair costs and closing costs. While they may be helpful, mortgage insurance has racked up its fees in the past months. According to mortgage analyst Dan Green in his blog, “Private mortgage insurance premiums are on the rise because mortgage defaults are on the rise.  It would be like Tampa Bay getting hit by Hurricane Phil, causing the insurance companies to unilaterally raising their cost of Bay Area coverage.  Once bit, twice profitable, they always say.” The downturn in the housing market has led the Mortgage Insurance Companies of America to report a 77.4 percent drop YoY in mortgage insurance applications last November. For low income earners, getting mortgage insurance may be more difficult. The insurance won’t always come as a relief but another financial burden that they have to comply with. Nevertheless, it leaves them no choice because the lender is posed with a higher risk by the borrower’s monthly earnings. They can avoid paying for the insurance on the other hand but they wouldn’t be able to afford more than 5 percent equity or pay at least 80 percent of their loan. In most mortgages though, the PMI is mandatory for loans where the downpayment is less than 20 percent of the house’s value.  The Federal Housing Administration’s mortgage insurance covers homebuyers who belong to lower income levels and can’t avail of conventional mortgages. Among its features include lower downpayment of 3 percent against a traditional loans’ 10 percent, the up-front premium are added to the regular mortgage payment and regulated limited fees for the borrower. Only owner-occupants can avail of the program. You cannot cancel your insurance with an FHA loan however, other loans permit you to do so once your equity has reached 20 percent. That means you have reached a sufficient amount of equity in your home. The bottom line is that it’s the lender who will benefit from the insurance once you default. It’s not your protection but his. It’s important therefore that borrowers especially low-income earners must be aware of a PMI’s nature to avoid unnecessary costs once enough equity has been established. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services.  Follow the Realty.com blog for up to date housing news and trends.  And monitor local mortgage rates at RealtyGadget.com. 2009-01-06T21:50:01-05:00 http://www.realty.com/blog/new-year-no-job-no-mortgage-payment/ http://www.realty.com/blog/new-year-no-job-no-mortgage-payment/#When:17:22:00Z It’s becoming a common situation among the laid off in 2008. For those who had to clear their office tables and start adjusting their monthly expenses after 6-figure salaries, the reality of post-layoff blues may take its toll this year. It’s no wonder why jobless claims have risen in just as short as five months with several large companies filing for bankruptcy. The latest count estimates 4.5 million people are receiving unemployment benefits – a 27-year high in the country. Delinquencies for mortgage payments for distraught borrowers continue to be one of the burdens faced by the jobless as they run into more credit problems along the way. Meeting their financial obligations has become even harder this year. The key to averting long-term delinquency is to be aware of the solutions that are available. Workout options vary from one lender to another and there are other services that have sprung up due to the mounting foreclosures in the country. One of the first steps is to call the lender or bank and notify them about your delayed payment. With the rising foreclosure and delinquency cases, not all borrowers will be given priority or be re-notified unlike two years ago even if it is in the lenders’ interest to put your status back on track as they earn their living from your regular payments. Borrowers need to explain everything so that their status can be evaluated and matched with the correct option.  Solutions are plenty. Repayment plans consent to purchasing the loan at current price. It allows you to repay part of the delinquency each month aside from the regular monthly payments that you have to fulfill. Just take caution if your loan has a prepayment penalty that would certainly rack up your fees. Forbearance plans on the other hand suspend payments for a limited period. In most cases, the loan payment is postponed for at least four months. The qualification may be more difficult though since the credit crunch has made more lenders austere. Then borrowers can choose to either modify their adjustable rate mortgages to fixed types or resort to refinancing depending on their situation. It would also help to contact a credit counselor before you proceed to any action. Just be sure that they do not take advantage of your situation. Since last year, more financial counselors have aggressively preyed on delinquent borrowers. Les Christie of CNNMoney.com reveals that many for-profit firms demand high fees from clients in exchange for financial advice. In most states, a loan that has not been modified after the consultation with the lender will not have any reimbursement of the counseling fee, not even half of the expensive bill. These are legal businesses that will negotiate with the lender but the high assurance of loan modification that they guarantee does not always bear fruit.  The key here is to be aware, seek support and follow the proper recommendation. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services.  Follow the Realty.com blog for up to date housing news and trends.  And monitor local mortgage rates at RealtyGadget.com. 2009-01-05T17:22:00-05:00 http://www.realty.com/blog/why-2009-wont-be-as-bad-as-you-think/ http://www.realty.com/blog/why-2009-wont-be-as-bad-as-you-think/#When:18:03:00Z We cite three good reasons to still hope for better. Though most forecasts for the year pin on an even worse performance of the property sector, we decided to resist the inescapable pessimism that lingers in the economy. Here are some reasons not to feel too harsh about the next 365 days even if analysts remain skeptical and you couldn’t find a single trace of Lehman Brothers anywhere. Tax Credits First time homeowners can avail of $7,500 in tax credits until June 30. The Housing and Economic Recovery Act of 2008 has made significant efforts in reducing the supply of houses in the market by offering incentives to new homeowners. Best of all, it’s repayable in 15 years that is if you can beat the obstacles to first time homeownership that we previously blogged about.  The Federal Housing Administration also offers other provisions like better foreclosure relief, lower income housing tax credit and temporary tax relief for those who do not itemize their deductions. Oil Prices Gasoline prices have lowered for the last five months. For the first time in five years, oil prices have subsided starting July as the financial crisis weathered businesses, severely damaging commercial and personal consumption. Before demand picks up by the later part of the year (as noticed for the past four weeks by the Energy Information Administration ), current low prices would still mean extra savings to keep that house out of foreclosure. Recession-proof Industries Forbes.com believes that areas with thriving industries in video gaming, cosmetics, waste management, discount shops, for-profit education, comfort food and fast food need not aggravate with the slowdown in the economy. Workers could be confident to keep their jobs for the next twelve months. In our opinion, those in the public works that stand to gain much from the planned public works program of president-elect Obama could repel the economic downturn the most. If recently retrenched workers can qualify and transfer to these industries, unemployment rates can be cut by half and foreclosure rates can be controlled. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services.  Follow the Realty.com blog for up to date housing news and trends.  And monitor local mortgage rates at RealtyGadget.com. 2009-01-02T18:03:00-05:00 http://www.realty.com/blog/2008s-top-ten-newsmakers-in-real-estate/ http://www.realty.com/blog/2008s-top-ten-newsmakers-in-real-estate/#When:17:45:00Z 2008-12-31T17:45:00-05:00 http://www.realty.com/blog/is-no-cost-truly-zero-cost/ http://www.realty.com/blog/is-no-cost-truly-zero-cost/#When:02:10:01Z What the no cost refinance loan hides from those interested to grab the offer. What’s not to like about no cost mortgage refinancing? A lot. Though there are preliminary benefits that include no prepayment penalties and other out-of-pocket expenses, refinancing applicants need to know that there are costs kept hidden until subsequent discussions with their lender. In today’s economy, nothing is definitely given for free. No cost loans are so named because the lender would have to package the closing costs to a different payment scheme thus raising the size of your mortgage. To put it simply, you’d still pay for the other costs but at later dates. It targets typical homeowners who would want to convert their adjustable rate mortgage (ARM) to a restructured ARM or a new fixed rate mortgage. Those who would want to shorten their terms may also avail of the offer. So how do these banks and lenders turn their marketing scheme into the same old story? The most common way is to strike a higher interest rate after explicit talks about absolute no upfront fees with the borrower. In this way, they can recover the closing costs that they would eliminate first. Another scheme is one where the mortgage provider will pay the credit report, lawyer fees, appraisal and even the courier but with a certain catch – borrowers would have to shoulder the costs of appraisal and credit report first before it will be refunded. Prepaid, escrow and lender fees are obviously not included as this is part of borrower’s personal expenses already. If the loan isn’t granted, then there’s no possibility that the said expenses will be returned. Another practice is through adjusting the yield spread premium. The YSP is the payment to the broker who sold you the interest rate that is higher than the lowest rate that you have qualified for. If the lender sees an opportunity by which the costs can be recouped, simply adding a few points to the YSP can bloat your initial no cost computation. It’s that easy. So you may wonder if this type of loan is still applicable in today’s credit situation. If you are in the habit of refinancing your mortgage again and again (though we can agree with Audrey Forshey’s top 9 learned lesson about the guarantee of repeat approvals), no cost loans are a viable option. However, if you find the additional costs that will still be carried over to be relatively expensive, we suggest you keep away from your lender’s no cost offer. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services.  Follow the Realty.com blog for up to date housing news and trends.  And monitor local mortgage rates at RealtyGadget.com. 2008-12-31T02:10:01-05:00 http://www.realty.com/blog/why-first-time-homeownership-doesnt-come-easy/ http://www.realty.com/blog/why-first-time-homeownership-doesnt-come-easy/#When:16:15:01Z Not all new buyers can easily move in a new home. Find out why. For those following the real estate news, it’s impossible not to have stumbled upon government initiatives to spur home sales from first time buyers. Through tax credit explicit in the Housing and Economy Recovery Act of 2008, more Americans are expected to snap up the large supply of houses in the market that are currently depressing national home values. However, not all things can fare well for this large segment of buyers for a number of reasons. Obviously, first time homebuyers do not have any mortgage experience from which the lender can easily review during application. Since the pre-qualification serves as the first basis of granting potential borrowers the needed amount, it won’t suffice to the credit history that other applicants possess. Most lenders however, screen applicants through secured loans that allow them to verify if the net income of the borrower is sufficient enough to cover the costs of the mortgage. Borrowers then get discouraged by the higher interest rate imposed to them that must come with the lack of credit profile. Another setback is affordability of houses. With lower prices set in the market today, the median resale price for existing homes has gone by 9 percent over the past two years according to the National Association of Realtors. That may sound good news to those who can meet the minimum cost for financing mortgage payments but for lower-income buyers, it may be a different case all throughout. Usually, they have lower savings or are employed in positions with lower annual gross incomes. Though there may be homes that can match what they can afford, it doesn’t necessarily mean that these are closer to their workplace or their children’s schools. Should they choose to relocate but keep their jobs, they would then suffer the costs of transportation which would constitute a large deduction in their savings. Borrower and lender mismatch is another problem. Too often, first time homebuyers do not shop for the best mortgages around. Worse, they end up with mortgage bankers who take advantage of their situation by issuing unnecessary fees and closing costs. They may ask more documents for the borrower to submit and they would ask an additional fee now that more forms need to be processed. Lastly, delays are inevitable these days. A single lender can receive dozens of applications in a single day now that mortgage rates have gone down to 5 percent. As first time buyers, they may not be readily prioritized because those attempting to refinance their homes have existing relationships with the lender.  Just imagine the pile of applications and supporting documents that need to be reviewed page by page. Since a higher credit score increases the chances of earning a better interest rate and loan for the first time borrower, it is necessary that they improve their buying habits and assure employment security in the next ten years. That would be a significant pre-qualification asset. Also, they can ask friends and neighbors regarding mortgage banker references so they can reduce the risk of losing in their transactions. Finally, if they are confident enough to be granted with a mortgage, they should act now while prices are relatively affordable compared two years ago. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services.  Follow the Realty.com blog for up to date housing news and trends.  And monitor local mortgage rates at RealtyGadget.com. 2008-12-29T16:15:01-05:00 http://www.realty.com/blog/city-in-focus-soledad-ca/ http://www.realty.com/blog/city-in-focus-soledad-ca/#When:14:32:00Z Their property market has fallen prey to the subprime mortgage crisis. Soledad is touted as one of the fastest growing cities in California. The city is popular for its agricultural land that is good for growing greens. In fact, the Dole Food Company operates one of its plants in the area. Most people are proud of the place’s wineries the most popular of which are the Smith & Hook Winery and Estacia Estates that provide a good number of jobs to its Hispanic residents. These wineries are the main drivers to tourism growth where visitors enjoy wine tasting opportunities even on weekdays.  Properties. The local government has successfully launched the Housing to Jobs Housing Balance program that balanced job creation in housing starts in 2001. However, the current crisis has hit the city’s real estate activity severely. Data reveal that beginning 2007, housing values started to fall from its healthier days in the prior years. From more than $550,000 in the last quarter of 2006, it fell down to $225,000 in a matter of only two years. As Prashant Gopal quotes Gloria Ledesma, a broker in Soledad: Soledad… experienced explosive growth during the boom. Four different builders had projects under way, each with long buyer waiting lists, seven real estate offices were open to accommodate frenzied buyers, mortgage fraud was rampant, and people stretched to purchase properties they couldn’t afford…It crashed hard. Only three real estate agencies survived, she said. And most of the homes that are selling are bank-owned properties or so-called short-sales in which lenders agree to accept less than the balance of the mortgage. It is in fact, noticeable that the city has unfinished structures that stand barren on the ground. Like most cities caught in the subprime mortgage mess, the lending atmosphere has turned unfavorable to homeowners. More banks have tightened their credit and credit was very limited only to worthy borrowers who are most likely to belong to the high-income bracket. Solution. One program that was launched by the California Housing Finance Agency is the Complete First Time Home Buyer Program. It offers down payment assistance to first-time homebuyers provided they meet certain qualifications. The problem however is that most lenders aren’t too congenial to such buyers since they are exposed to a higher risk of defaulting. Since no record of mortgage payment is available, lenders would have a hard time assessing borrower creditworthiness. It is a setback like this that may transform the city to a real estate ghost town in the coming months. Soledad is just one of the many Golden State cities that are devastated by falling home values. You can check out properties in these locations in our Property Search section. For updates on mortgage rates and lenders around the country, our mortgage rates section lists complete, current rates from across the country.  We also invite you to use our current mortgage rates dedicated site RealtyGadget for bulk mortgage rate searches and customizable RSS feeds. 2008-12-29T14:32:00-05:00 http://www.realty.com/blog/should-you-refinance-at-514-percent/ http://www.realty.com/blog/should-you-refinance-at-514-percent/#When:14:24:00Z Here’s what you should consider Businessweek recently reported a surge in refinancing applications after mortgage rates set a record low in Freddie Mac’s 37-year tracking. The most popular 30-year fixed rate mortgage fell to 5.14 percent from 5.19 percent last week while the 15-year fixed type fell by 0.01 percent from 4.92 percent. Such plunge brought a rush in mortgage applications that included a stream of refinancing submissions from homeowners caught in the property downturn. So is this the right time to file that refinancing form and take advantage of lower monthly payments? Who should act now? The low rates are too enticing that anybody trapped in a punishing ARM needs to act quickly. For those wanting to convert their adjustable rate mortgages (ARMs), take the opportunity to lower your monthly payments. There was a period when the 5-year jumbo rate had an interest below the 30-year fixed mortgage so it was smart to hold on their loan instead of refinancing. Applicants need to remember that to fully benefit from refinancing, they must have high credit scores (usually 700) so that lenders won’t impose additional hidden costs. Who should wait then? If you’re waiting for the Fed’s target of 4.5 percent then you have to wait for a little while. Such low rate can only be achieved with bolder federal measures that may not take place during the first quarter of next year. It’s a risk that homeowners must take should they want easier terms. The best things to do are to advice your lender about your target rate and wait for the rates to hit below 5 percent. Just be sure that the paperwork is moving by following up on your lender once you’ve decided to strike a deal. The tons of applications may overwhelm the lender who’s now facing more applicants compared a year ago. Service costs and insurance fees may also rack up the monthly payments of borrowers. If application fees, insurance and origination expenses are carried over to the principal, the mortgage rate based on the principal will also augment. If the difference between your existing mortgage versus your desired borrowing rate is only narrow, wait for further lowering of rates to minimize the effects of service and insurance expenses. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services.  Follow the Realty.com blog for up to date housing news and trends.  And monitor local mortgage rates at RealtyGadget.com. 2008-12-29T14:24:00-05:00 http://www.realty.com/blog/who-needs-a-bailout-definitely-not-these-banks/ http://www.realty.com/blog/who-needs-a-bailout-definitely-not-these-banks/#When:13:58:00Z They may be small but they can challenge the big guys in Wall Street. If banks and auto companies are fighting over the $700 billion bailout fund, some banks are likely to change the trend in the industry. Two banks are resisting the bailout offers of the Treasury Department. They are less popular in the financial world and yes, they are small – so small that the media would have to mention their location right after their names. While this may be startling to some readers, these banks have been trying to gain public support with their decision not to participate in the Troubled Asset Relief Program (TARP). The Evergreen Federal Bank in Grants Pass, Oregon has guaranteed that depositors are account-holders and they are considered the investors in the bank. Such arrangement won’t allow the Federal Reserve to offer them the TARP fund. In the words of the bank’s head, Brady Adams : All the other banks in our area are owned by investors; and the purpose of those banks must be to maximize the value of the stock held by their investors. The management, and staff, of those banks work for the investors who own the bank. I don’t work for stock investors; I, and the staff, work for you. The thousands of you who have trusted Evergreen with your hard earned money are my boss. Another bank in Maclean, Virginia shares the same view. The Chain Bridge Bank N.A. has published its balance sheet for September 2008 that indicates the institution’s strong financials and clean record. Interestingly, the bank has highlighted three assets namely Investments in Fannie Mae and Freddie Mac, Subprime and Alt A Loans, and Real Estate Owned Through Foreclosure. All three entries were valued with zero. At the bottom of the sheet, it takes pride in refusing any bailout package. Both banks have tuned their efforts to communities where they can transact to small businesses and homeowners through personal banking. On the positive side, they can assure clients that they have adhered to ethical standards amidst loose regulation by the government during the subprime mortgage craze. Such behavior allowed them to ride out the recession storm and would secure them more customers who are now too careful to entrust their money just to anybody else. Second, these banks would likely fall on the “strong” list of banks that are weeded out from the bailout list. Therefore from the start, they are not eligible to receive support after all. However, their decision can also be a detriment since the recession would likely continue next year. That would put them at risk since they are situated in small towns where middle-income dwellers are easily hit by the effects of unemployment and worsening home values. With fewer deposits and loans, they may still find themselves caught by the crisis eventually. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services.  Follow the Realty.com blog for up to date housing news and trends.  And monitor local mortgage rates at RealtyGadget.com. 2008-12-27T13:58:00-05:00