Getting a Mortgage in 2010: Things you should know

More than three years into a painful housing crash, the real estate market has sent recent--albeit tentative--signs of stabilization. Home sales have increased, inventory levels are down, and price declines have become less precipitous. Along with more affordable home prices and a tax perk from Uncle Sam, attractive mortgage rates--which remained below 5 percent as of late November--have been a driving force behind this development. The availability of low mortgage rates will play a decisive role in the performance of the 2010 housing market as well. To help consumers better understand the requirements and costs they will face as they shop for a home loan next year, U.S. News spoke with a handful of housing market experts and compiled a list of 10 things to know about getting a mortgage in 2010.

1. Still tight: The steep run-up in home prices during the first half of the decade was fueled in large part by breezy lending standards. Some bankers handed out loans without down payments or documentation requirements. But when the housing bubble popped and those loans became massive losses, banks began raising lending standards for borrowers of all stripes. And with the labor market continuing to erode--the unemployment rate hit 10.2 percent in October--and mortgage delinquency rates setting new records, there is no reason to expect credit requirements to loosen in 2010. "Lending standards have tightened dramatically between 2007 and 2009," says Scott Stern, CEO of Lenders One, a cooperative of independent mortgage bankers. "I think there will be a little more belt-tightening in 2010."


2. Down payments: This tight credit environment affects consumers in several ways. First, down payment requirements will be higher than they were just a few years ago. Loans backed by the Federal Housing Administration are at the low end of the spectrum and come with minimum down payments of 3.5 percent. (More on FHA loans below.) Down payments on loans outside of the FHA will vary depending on the market, the borrower, and the property type. "Generally, to get the best rate around, you need at least 20 percent for a down payment," says Guy Cecala, publisher of Inside Mortgage Finance. "That doesn't mean you can't get a mortgage if you have less of a down payment . . . it just means that you are not going to get the best interest rates." Could lenders ease up on down payment requirements in 2010? Possibly. If lenders become convinced that home prices are improving, they may allow borrowers to put slightly less down. But don't expect that to occur until the end of the year--if at all.


3. Credit scores: Cecala says that borrowers will need a FICO score of at least 730 to get the best mortgage rates. They also will need to fully document their income and assets. To ensure that your credit score is as strong as possible, borrowers should access their credit reports. The Fair and Accurate Credit Transactions Act entitles consumers to one free credit report from all three major credit reporting bureaus--TransUnion, Equifax, and Experian--each year. (The free reports can be obtained at annualcreditreport.com.) Consumers should examine each report to make sure it doesn't include any errors. "[Consumers] ought to know what their credit score is; they ought to know what's on their credit report; they ought to make sure that what's on their credit report is in fact theirs," says Rick Allen, director of strategic initiatives for Mortgage Marvel, an online mortgage shopping website. "That's a must do for everybody."


4. FHA: Borrowers who can't meet these tighter lending requirements can turn to the FHA, a federal agency that insures mortgage loans against default. Standards for FHA loans are typically less onerous than those for private lenders. The average credit score for FHA borrowers is about 690, and the minimum down payment is 3.5 percent, Cecala says. "If you can't make the 730 [credit score] or you can't make the 20 percent down [payment], the next best thing is FHA," Cecala says. The downside is that FHA loans come with additional costs. Borrowers must pay an insurance premium as well as a slightly higher interest rate, Cecala says.


5. FHA increase? With so many borrowers unable to meet today's stricter lending requirements, FHA-backed loans have become increasingly popular. Today, the FHA guarantees nearly 3 of every 10 new home mortgages. That's a stunning increase from 2006, when the agency backed roughly 3 percent of new home loans. Meanwhile, the agency's finances have deteriorated considerably. The seasonally adjusted delinquency rate for FHA loans increased from about 13 percent in the third quarter of last year to 14.36 percent in this year's third quarter. At the same time, the agency's capital reserve ratio dipped below the level that Congress mandates. In the face of mounting political pressure, the Obama administration has announced new steps that may make it more difficult for some borrowers to obtain mortgages backed by the agency. The steps include raising the minimum FICO score, increasing up-front cash requirements, and possibly charging higher insurance premiums. "We want to ensure that we are able to continue to support the housing market in the short term and provide access to homeownership over the long-term, while minimizing the risk to the American taxpayer," Housing and Urban Development Secretary Shaun Donovan told a congressional committee in written testimony.

Read the full story with additional things to know here: http://news.yahoo.com/s/usnews/20091203/ts_usnews/gettingamortgagein201010thingstoknow

Courtesy of U.S.NEWS

Mortgage Applications Rise on Falling Rates

Mortgage applications bounced back last week with the Mortgage Bankers Association market index rising 5.6 percent on a seasonally adjusted basis compared to the previous week.

On an unadjusted basis, the index increased 4.8 percent and was up 25 percent compared with the same week a year ago.

The recent seesaw of mortgage rates has affected refinances more than purchases. The refinance index rose 6.9 percent last week after falling 7.2 percent the previous week, reflecting declining mortgage rates. The purchase index, which has trended upward gradually, rose 3.9 percent.

Here are the average performances of mortgage rates this week:

30-year fixed-rate mortgages decreased to 5.15 percent from 5.38 percent.
15-year fixed-rate mortgages decreased to 4.52 percent from 4.71 percent.
1-year ARMs decreased to 6.66 percent from 6.71 percent.

Source: Mortgage Bankers Association (08/19/2009)

Housing Market on the Rise

Jul 23, 12:06 PM EDT – Dallas Morning News

June existing home sales rise by 3.6 percent
By ALAN ZIBEL
AP Real Estate Writer
WASHINGTON (AP) -- The U.S. housing market has started to recover from the most far-reaching crisis since the Great Depression, data released Thursday shows.
Sales of previously occupied homes rose for the third month in a row in June, the National Association of Realtors reported. That hasn't happened since early 2004, during the boom.
"The turnaround in the housing market appears finally to be here and indeed may be gaining some speed," wrote Joel Naroff, president of Naroff Economic Advisors Inc.
Stocks jumped on the news, with the Dow Jones industrial average rising above 9,000 for the first time since early January.
Home sales rose 3.6 percent to a seasonally adjusted annual rate of 4.89 million last month, from a downwardly revised pace of 4.72 million in May. Sales were up in all four regions of the country.
It was the highest level of sales since last October and beat economists' expectations. Sales had been expected to rise to an annual pace of 4.84 million units, according to Thomson Reuters.
In another encouraging sign, the share of foreclosures on the market is shrinking. About one out of three homes sold in June was foreclosure-related, down from nearly half earlier this year.
And the glut of homes up for sale dwindled to 3.8 million. That's a 9.4-month supply at the current sales pace and another important sign of a recovery. When the market balances at a 7-month supply prices should begin to stabilize, the Realtors's group said.
That probably won't happen until next year because of a backlog of foreclosures that have yet to come on to the market. The median sales price was $181,800 in June, down 15 percent from year-ago levels but up slightly from $174,700 in May.
Nevertheless, prices have risen for three straight months in about half of the 55 major metropolitan areas tracked by the Associated Press-Re/Max Housing Report, also released Thursday.
Source: © 2009 The Associated Press. All rights reserved.

10 Ways to Prepare for Homeownership

1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop your home wish list. Then, prioritize the features on your list.

3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.

4. Start saving.Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 3.5% to 20% of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price.

5. Get your credit in order.Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.

6. Determine your mortgage qualifications.How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you.

7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.

8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.

9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.

10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process.

Source Realtor.org

Home Lending Rates Falling Again

Daily Real Estate News


Rates on 30-year fixed mortgages fell to 5.14 percent for the week ended July 16, down from 5.20 percent a week before and 6.26 percent a year earlier, Freddie Mac reports.

Interest on fixed home loans has fallen in four of the past five weeks, and Freddie Mac economist Frank Nothaft says rate activity during that time has lowered the monthly payment on a $200,000 loan by $56.

Here’s a look at how other mortgage rates performed this week:

15-year fixed loans fell to 4.63 percent from 4.69 percent.
One-year adjustable-rate mortgages fell to 4.76 percent from 4.82 percent.
Five-year hybrid ARMs bumped up a notch to 4.83 percent from 4.82 percent.

Source: Grand Junction Free Press, Wyatt Haupt Jr. (07/17/09)

Mortgage Rates are Rising

Mortgage Rates Reach 7-Month High
Higher interest rates put the brakes on mortgage refinancing this week, according to Freddie Mac.

The firm's weekly survey pegged interest on 30-year fixed mortgages at an average of 5.59 percent -- up from 5.29 percent last week and the highest rate since November 2008.

Other rates also climbed:

Interest climbed to 5.06 percent from 4.79 percent for 15-year fixed loans;
5.17 percent from 4.85 percent for five-year, adjustable-rate mortgages;
5.04 percent from 4.81 percent for one-year ARMs.

Freddie Mac chief economist Frank Nothaft says the gains are not affecting home purchase loans.

Source: Boston Globe (06/12/09)

Water-conserving, money-saving tips for summer gardens

(ARA) - Summer 2009 may be a bit less dry than last year in some areas of the country, according to the National Weather Service’s Seasonal Drought Outlook. But it still makes sense, both environmentally and economically, to conserve water as much as possible in your gardening and landscaping efforts.

“Nothing shouts ‘green’ quite like a thriving garden or a lush landscape,” says Susan Thayer, an irrigation and water conservation expert, “. . . except, perhaps, a beautiful yard or garden that’s been nurtured with green practices that conserve precious water.”

While drought in some mid-northern areas is expected to improve, dry conditions will likely persist in areas such as California, Texas, Florida and North Carolina, according the Seasonal Drought Outlook map. One thing that isn’t likely to change anytime soon, however, is the need to cut costs and conserve resources during an economic recession.
http://www.misterlandscaper.com">Conserving water makes sense environmentally, and can also help your family reduce your water utility bill this summer.

It is possible to grow a thriving garden and nurture a lovely landscape while minimizing water consumption and saving money on your water bill. A combination of native-friendly plants, smart agricultural practices, alternative water sources and efficient irrigation can help keep gardens and lawns growing healthy throughout dry summer months.

Here are some tips for conserving water and saving money by reducing your water bill in your corner of planet.

* Choose drought-resistant native plants for your landscaping needs. Your options won’t be limited to cactus, either. From ornamental grasses to shrub roses, many drought-tolerant native species also offer bright color and visual appeal. Look for plants that do well in the driest conditions found in your geographic region. Your local Cooperative Extension office can help you identify plants that are right for your area. You’ll also find plenty of ideas online at sites like http://www.misterlandscaper.com">Irrigate efficiently with low-volume irrigation systems and smart watering practices. Many communities now require all newly built homes to use low-volume irrigation in their landscapes. On average, micro sprinklers and drip irrigation uses 80 to 90 percent less water than traditional irrigation systems.

Irrigation manufacturers like Mister Landscaper are responding to increased consumer demand for low-volume systems by offering micro sprinkler and drip products that homeowners can easily install on their own. Mister Landscaper’s Micro Sprinkler Starter Kits efficiently and slowly irrigate flower and vegetable gardens, as well as areas where trees and shrubs grow. They are available in the plumbing department at Lowe’s Home Improvement stores or online at www.misterlandscaper.com. The system also offers a variety of retrofit products that allow you to replace or add on to an existing underground pvc sprinkler system so you can convert 120 gallons per hour (gph) heads to a 10 gph micro spray or 1-2gph dripper.

“The key is to apply water only exactly when and where it is needed,” Thayer says. Drip and micro spray irrigation provide optimum efficiency with minimum waste and over spray.

* Design your landscaping to minimize evaporation. Windbreaks and fences slow the movement of the wind over the ground and the evaporation it causes, according to the Natural Resources Conservation Service.

5-year Commercial "TALF" Loans in Works

The Federal Reserve might compromise with commercial real estate owners and investors and lengthen the terms of the Term Asset-Backed Securities Loan Facility (TALF) loans from three to five years while upping the interest rate.

Commercial real estate interests have been pressuring the Fed to extend TALF loan terms, but the Fed prefers to keep them short as a tool to fight inflation. Real-estate investors say a longer term is critical because an extra couple of years will help stabilize the market, which faces a mound of debt coming due in the next three years.

Charging higher rates for longer terms, “as a compromise, seems like it meets the needs of both sides,” said Louis Crandall, chief economist at Wrightson ICAP LLC. “It’s the certainty of the funding, and providing certainty goes a long way to address those concerns.”

Courtesy of Realtor.org...Source: Bloomberg, Scott Lanman (04/08/09)

Don't stay on the Fence about buying a Home

Daily Real Estate News | April 3, 2009 | Share
A Record Low for Mortgage Rates, Again
Just one week after 30-year mortgage rates fell to a record low of 4.85 percent, the average dropped even further to 4.78 percent this week, Freddie Mac reported.

Refinancing activity has picked up because of the low rates, and the Mortgage Bankers Association says approximately 80 percent of mortgage applications came from borrowers seeking to refinance.

Source: Boston Globe (04/03/09)

© Copyright 2009 Information Inc

Spring Home Deals are Healthy for Those Who Know the Score

(ARA) – Motivated sellers, builders offering deep discounts and incentives, historically low mortgage rates, plenty of inventory and fierce competition for qualified borrowers –it’s actually a great time to be buying a house. If your credit score is good, you’re in an even better position to negotiate the loan on the home of your dreams this spring.



Spring has always been a popular time to buy a new home. More people put their homes on the market when the weather is warm, and a wealth of inventory is available. With winter thawing into distant memory, home shoppers are ready for a fresh start in a new house. Buying a home in spring will help new homeowners ensure they move their families during the summer, and not at the beginning or in the middle of the school year.

With plenty of housing opportunities and low interest rates currently available, it pays to ensure you’re in a position of power when you go home shopping this spring. Here are some simple tips for ensuring you’re in the driver’s seat when buying a house:



Know Your Credit Score



You may not be able to control the economy, but your credit score is a financial reality you do have control over. The higher your score, the more likely you are to be able to negotiate lower interest rates when mortgage hunting.



Before you look at a single house, find out what your credit score is. Sites like FreeCreditReport.com give you access to your free credit report -- which will show potential lenders your payment history and help them decide if you’re a good or even great credit risk. Through the Web site, you can also get your credit score from Experian, one of the three top credit bureaus lenders turn to when evaluating the credit-worthiness of potential borrowers.



The better your score, the better your chances of scoring a great loan, so take steps to improve your score, such as paying off credit cards quickly, paying bills on time and minimizing your use of  revolving credit. Errors can occur and if you find some on your credit report, work directly with the credit bureaus to have them corrected.



Know the Playing Field



Once you’re confident you have a powerful credit score, research the market where you’re interested in buying. In addition to considering the quality of schools, proximity to work, entertainment and amenities a neighborhood has to offer; consider the number of foreclosures in an area and how much home values have dipped in the past year.



Is the neighborhood you’re interested in poised to regain value quickly when the real estate market rebounds? Recovery speed could be an important consideration if you plan to stay in the home only a few years. If you’re in the home for the long haul, you may be less concerned about how quickly home values in the neighborhood will improve.



This spring can be a great time to start fresh in a new home. To ensure you’re well-positioned to take advantage of the great housing deals, visit www.FreeCreditReport.com first to learn about your free credit report.



Courtesy of ARAcontent

Home Purchase: Deal or No Deal?

Deal. If you are contemplating buying a home, now may be the perfect time to make a purchase -- if you have the money and a secure job.

Real estate sales have sagged in many parts of the country as buyers have been frozen in the headlights of the economic downturn. As a result, prices are falling in many markets.

"If I could buy real estate right now, I would," says Amy Bonis, a certified mortgage planner with Alera Financial in Raleigh, N.C. "It's clearly a buyer's market. If you can buy a house that is undervalued, it's like, what shade of green do you want?"

In addition, mortgage rates have fallen near historic lows, substantially reducing the cost of financing for buyers with good credit.

Bonis says buyers who act now rather than wait are likely to see the best return.

"Somebody has to start buying, and when they do, there are going to be more buyers on the market, which is going to cause home prices to go up," she says. "When you stimulate home prices to go up, that affects the economy in a positive way, which raises interest rates. What people don't realize is, by the time they hear that things are better, (their opportunity) is already gone."


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Does Moving Up Make Sense?

These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move.

1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.

2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.

3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district.

4. Are there reasons why you can’t remodel or add on? Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.

5. Are you comfortable moving in the current housing market? If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.

6. Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

Courtesy of Realtor.org

Simple Steps to Achieve a Better Credit Score

(ARA) – Americans are dealing with the credit crunch by keeping cash on hand. In the process, however, the average consumer is paying 2.6 bills late every month, according to the Western Union Payment Services Money Mindset Index.



Unfortunately, late fees and additional unnecessary charges can stack up quickly, depleting your cash flow and harming your credit score. Here’s how it works:



The longer you maintain a track record of paying your bills on time, the better your credit score, according to the Fair Isaac Corporation, which created the FICO score, more commonly known as a credit score. Your bill payment history accounts for 35 percent of your credit score, which is used to determine your eligibility for mortgages, auto loans, credit cards and other financing.  



However, late fees can lower your credit score -- and there’s no quick fix. When you apply for a loan, a low score may hinder your efforts to secure funds.  



“Managing your finances can feel like a juggling act that won’t end,” says David Shapiro, senior vice president of Western Union. “Flexible payment plans can help consumers keep their cash flow strong by timing the paying of bills to when they get their paychecks. This allows you to avoid late charges and risking credit standing. Over time, consumers can build a strong credit history, allowing them to finance a car or a home when they are ready.”  



In tough economic times, Shapiro and other experts say, lenders will scrutinize your credit score even more. Many credit offerings and debt consolidation loans may seem advantageous, but can actually lead to debt disaster. Here are simple tips for avoiding unnecessary fees and maintaining a good credit score:

 

* Avoid credit agencies that charge fees to improve your credit score. You can go online to reputable sites such as money.com or kiplinger.com and receive free advice.



* Research flexible payment plans that allow you to make smaller, more frequent affordable payments, such as paying a bill twice a month, but at smaller increments that suit your monthly budget.  



* Pay off credit card debt. Maintaining low balances can show your ability to manage bills and can increase your credit score over time. Once you pay it off, try to only carry a balance that you can pay off in a month. Paying off your balance each month in full can help your credit score.



*  Consider same-day payments. You can maximize cash flow by paying your bill the same day it is due. For example, you can make an in-person cash payment at more than 45,000 Western Union Agent locations, and receive proof of payment within minutes. Visit WesternUnion.com to find the closest agent near you.



* Check your credit report. You can get a free report at annualcreditreport.com or by calling (877) 322-8228. If you see a mistake, take necessary steps to get the mistake corrected as soon as possible.



* Learn more about credit scores. Download a free educational brochure from Fair Isaac Corporation’s Web site, www.myfico.com.



Just a few simple steps can make a big difference in managing your finances. Once you have a plan in place, what seems like a juggling act will turn into a smooth transition.  



Courtesy of ARAcontent

1st Time homebuyers-Buy a home Before Filing Taxes this year

Before you file your taxes this year, don't forget about the $7500 tax credit for first-time home buyers, which was enacted by the 2008 American Housing Rescue and Foreclosure Act. Designed to help stimulate interest in the housing market, this temporary provision provides a first-time home buyer (someone who hasn't owned a home in the last three years) a tax credit of up to $7500 for homes purchased between April 8, 2008 and July 1, 2009. Basically the tax credit, which must be repaid over 15 years, is an interest-free loan from the government to help you offset the costs of home ownership.

But here's the best part. The law allows qualified taxpayers to take the credit against either their 2008 or 2009 taxes. This means, if you qualify, you can buy a house this year before July 1st and receive the credit on the 2008 tax returns you're filling out right now. Imagine having an extra $7500 in cash to pay bills or credit cards or even pay for renovations on your new home. If you choose to utilize the credit on your 2009 returns, your tax professional can help you reduce income tax withholding up to the amount of the credit. This will help you to increase your take-home pay throughout the year to save money for a down payment for a qualified purchase before July 1st.

There are certain income restrictions and rules for repayment, but give us call today to learn more about this valuable government program for first-time home buyers.

Courtesy of All About News

Interest Rates-How low can it Go?

Key Interest Rate as low as it can go

The Federal Reserve on Tuesday lowered its benchmark federal funds rate to a range or zero to 0.25 percent and said it would likely keep rates low for an extended period.

"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," the Fed said.

The Fed also said it was prepared to purchase more debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-sponsored mortgage agencies. And it said it is considering purchases of longer-term U.S. Treasury debt.

"The focus of the committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level," it said.

Michael Woolfolk, senior currency strategist, at the Bank of New York-Mellon, applauded the Fed’s approach. "We think it's the best possible move for the U.S. consumer and for the financial market," Woolfolk said.

Source: Reuters News, Mark Felsenthal (10/16/2008)