Why Now Is The Time To Buy

Housing Market Has Bottomed, Banking Analyst Bove Says
By: Antonia Oprita Associate Web Producer, CNBC.com

The biggest problem that banks have faced was the fall in the housing market, and this seems to have bottomed, Rochdale Securities banking analyst Richard Bove told CNBC.
"I really believe that the industry has bottomed, that we're not going to see further crashes in home prices or in home sales," Bove told "Squawk Box."

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How To Get The Best Mortgage Rates

First, make sure you are comparing current mortgage rates for the same type of mortgage. Mortgage rates and closing costs can change significantly from one day to another, so if you are comparing offers from multiple lenders it must be done on the same day. For example, if you are shopping mortgage rates and have a quote for a 30 year fixed at 5.75%, only compare it to other 30 year fixed quotes at 5.75%.

Next, compare the total of all points and lender fees for each mortgage (from section 800 to 813 on the Good Faith Estimate), that is the price of the mortgage. The lender with the lowest cost has the best mortgage rates.

If you are refinancing, you will also need to review the cost of title insurance, closing/attorney, and appraisal. Some large national companies have negotiated excellent rates for these services on your behalf. The company with the lowest combination of points, fees and third party costs for the same rate and product has the best mortgage rates.

Things to Watch Out For

APR is not always accurate, so it should not be used. To get the best mortgage rates, compare current mortgage rates and closing costs.

Good Faith Estimates are just estimates. Many brokers and lenders will give you a low ball estimate, and then after you have paid for your appraisal, they will inform you that the mortgage rate or closing cost have gone up. Look for lenders that guarantee their closing costs up front.

There is nothing wrong with No/Zero Closing Cost Loans. Just be aware that you will be looking at higher mortgage rates in exchange or if you are refinancing, the closing costs could be included in your principal.

Paying higher points and fees will result in lower mortgage rates. For example, at 7% you may have zero points and fees, while at 6% you may have points and fees of $3000. To get the best mortgage rates, you must estimate how long you will have the mortgage. Also, make sure you are comparing current mortgage rates when doing your comparison.

Pending Home Sales Rise Again

Pending home sales show a sustained uptrend, rising for four consecutive months with very favorable housing affordability and a first-time buyer tax credit boosting activity, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in May, increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008 when it was 85.0. The last time there were four consecutive monthly gains was in October 2004.

Lawrence Yun , NAR chief economist, cautions that there could be delays in the number of contracts that go to closing.

“Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he says. “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”

Region

• Northeast: The Pending Home Sales Index in the Northeast rose 3.1 percent to 80.9 in May and is 6.8 percent above a year ago.
• Midwest : In the Midwest, the index slipped 1.3 percent to 89.2 but is 11.4 percent above May 2008.
• South: The index in the South declined 1.7 percent to 92.6 in May but is 7.9 percent higher than a year ago.
• West: In the West, the index rose 2.2 percent to 96.9 and is 0.7 percent above May 2008.

The Effects of Appraisals
NAR President Charles McMillan says the appraisal issue is complicated. “We see that distressed homes often are selling for 20 percent less than normal homes in the same area, but some appraisals don’t distinguish between traditional homes and distressed property,” he says. “In many cases appraisers from outside the area are being used, but as everyone knows real estate is local and appraisals should be done by an expert with local expertise.”

McMillan says sellers shouldn’t hesitate to speak with an appraiser about their home. “Sellers should feel free to tell an appraiser about improvements and renovations to their home, and how it compares with other homes in the neighborhood,” he adds.

“Also, if recent sales in the neighborhood were discounted, but not similar to your home in terms of quality or condition, that should be pointed out. It wouldn’t hurt to put all this in writing, especially if an appraiser is not familiar with your area. "

Affordability at a high
NAR’s Housing Affordability Index remains at historic highs. The affordability index fell to 171.6 in May from an upwardly revised 178.8 in April, which was the highest on record dating back to 1970. “Under these conditions the typical family would devote only 14.6 percent of gross income to mortgage principal and interest, which is one of the lowest percentages on record,” Yun says.

The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates, and family income.

A median-income family, earning $60,800, could afford a home costing $296,700 in May with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of what a median-income family can afford. The affordable price was significantly higher than the median existing single-family home price in May, which was $172,900.

First-time buyer tax credits offers a boost
The first-time buyer tax credit also is benefiting the market. “Strong activity by entry-level buyers is helping to absorb inventory and allow some existing owners to make a trade,” Yun says

Existing-home sales should trend up through the end of the year, with normal local market differences. “The big question is how much the appraisal issue will impact the ability of contracts to go to closing,” Yun says. “We are currently conducting a study to assess the degree to which new appraisal rules are impacting home sales.”

— NAR

Sales Are Up but Jam Persists for Jumbo Loans

Sales Are Up but Jam Persists for Jumbo Loans

While sales to first-time home buyers are up, experts say the jumbo loan market is weak because trade-up buyers cannot secure affordable financing.

"If you've ever wondered what the mortgage market would look like without government support, that's what we have today in the jumbo market," says mortgage industry consultant Howard Glaser.

NATIONAL ASSOCIATION OF REALTORS® Chief Economist Lawrence Yun notes that the spread between conforming and jumbo loan rates rose to 3.9 percentage points in March from 1.4 percentage points in 2005. He says buyers able to make a purchase are holding off because they do not want to pay jumbo loan rates.

Source: American Banker, Lew Sichelman (06/04/09)

© Copyright 2009 Information Inc.

Bargains Hard to Find In Attractive Areas

Bargains Hard to Find In Attractive Areas
Potential buyers in areas that were hard hit by the housing downturn have read about bargains, but only find it disappointing when they go shopping.

"Every open house I've been to has been a zoo," says first-time homebuyer Sam Rivero, who has looked at 35 properties during the last three months. "If you follow what the media say, you'd think sellers are desperate to sell a house, but when you get there it's totally the opposite."

When the real estate bubble burst, it didn’t affect the mid-priced market, said real estate information firm MDA DataQuick. Instead, it created opportunities in troubled neighborhoods and slowed sales in the market of homes priced above $1 million. But in areas where most of the homes sell for $400,000 to $800,000, there are few discounts to be found.

Even the foreclosure market has slowed, says University of Southern California Professor of Real Estate Tracey Seslen. Seslen said lenders with foreclosures are supporting market stabilization and releasing only a few homes at a time to avoid flooding the markets.

"The biggest problem," says Phyllis Harb, an associate with RE/Max Tri City in La Canada, Calif., "is that people are overreacting to housing statistics, thinking they can come in and make an offer 20 percent below price."

Source: Los Angeles Times, Chip Jacobs (05/03/2009)

Rates on Bigger Mortgages Poised to Come Down

Mortgage lenders will begin making loans between $625,500 and $729,750 in high-cost housing markets now that Fannie Mae and Freddie Mac have issued their underwriting standards.
Fannie Mae and Freddie Mac have said they will begin buying loans up to the new conforming-loan limit of $729,750 from mortgage lenders on May 4.
As more lenders originate loans in this range, the rates on them -- still at higher, jumbo pricing for the moment -- should begin to fall.
It remains to be seen, however, how much the cost of bigger home loans actually comes down.

Source: San Francisco Chronicle, Kathleen Pender (04/23/09)

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Highest Demand for Mortgages Seven Years

In Boston, Fed contacts reported “early signs of improvement” in the residential real estate sector, and the news was equally good in New York where the book said banks are reporting “the most widespread rise in demand for residential mortgages in more than seven years.”

Why Should I Buy Now?

Any investment consideration, whether it be real estate, gold, or fine art, follows a predictable cycle with nine stages. Let’s start with optimism, the period in which many people are excited about buying a home. When the market is strong, people’s purchases quickly increase in value, which leads to euphoria, which can lead to rash decision making.

From euphoria starts a downward cycle. As prices start to fall, buyers go into denial, with statements such as "I’ll be in the house a few years, so this won’t be a challenge." After denial comes fear, as prices continue to fall, followed by panic, despondency, and depression. After depression comes hope and then optimism (back to stage one).

The point of maximum risk for any investment is during the euphoria stage. The point of maximum opportunity is at the lowest point, between despondency and depression. That’s exactly where we are in many real estate markets today. Clients who are motivated and qualified to buy will be able to look at the market cycle chart and understand why now is the best time to invest in real estate.

What Makes A Great Real Estate Agent

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1. Can You Give Me an Instant Response to My Inquiry?

If you are looking for a new home you’re probably excited and anxious about getting started. An agent hoping to win your satisfaction, and business, will likely make it a priority to get back to you within a few minutes of receiving your inquiry – whether it’s a phone call or email.

The most impressive response I received was an auto response from an agent’s website, a personal response from them minutes later in an email letting me know that they’ll get back to me as soon as possible and a phone call just minutes later – all of this within about 10 minutes!

The agent showed that they wanted my business and proved that they would do what they say they’re going to do. If you’re looking for an agent to sell your home, you’re probably just as excited; which makes an instant response to your inquiry likely just as appreciated.

2. Do You Have Current Knowledge of the Local and National Real Estate Market?

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Any real estate agent worth your time needs to have a vast knowledge about the national housing industry, especially your local real estate market.

Yes…! There are several agents that don’t know what they need to about their own real estate markets – the very areas and neighborhoods that they do business in! How can an agent evaluate your situation and locate your ideal new home, without knowing the specifics of your real estate requirements?

An agent should educate you in a step-by-step manner in order to help make you feel comfortable throughout the selling and purchasing process. If waiting to sell your home or waiting to buy a new home is an option best suited for you, then a knowledgeable real estate agent will let you know.

3. Can You Give My Property an Online Presence?

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If you’re an agent upset that we just mentioned this as an important attribute of a great real estate agent then you probably don’t have a presence online!

Now I’m not implying that without a web presence your real estate agent can’t be the greatest real estate agent in the world; what I’m trying to say is that a web presence is crucial in today’s real estate industry – not to mention it definitely helps!

Nearly 80% of new home buyers* begin their search for a new home online, and if your agent can’t reach these people before other agents do… selling your home can become much more difficult. This doesn’t mean that your agent needs to have a website that ranks on the 1st Page of Google; it means that your agent needs to know how to effectively market and find homes online.

An agent with knowledge of the Internet will quickly be able to reach thousands of homebuyers with information about your home, and if they’re searching for your new home, they should easily be able to locate the home of your dreams at a price you can afford.

4. Will You Listen and Understand My Wants, Needs, and Concerns?

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If a real estate agent hopes to find the perfect home for you and/or sell your home, they must understand your wants and needs. They need to listen to everything you want, need, and expect; so that they know how they can best assist you during the buying and selling process.

Do you want your home sold in 90 days? Do you want a two-story home? Stainless steel appliances? A garden? A safe school for your children? The greatest real estate agent in the world will be able to listen to your every concern and appropriately address each of them.

Some Agents even give new clients a survey to fill out; this gives their clients time to think about all of their wants and needs and also gives the agent something to easily refer back to with any of the agent’s own questions. Many of these surveys are complete with questions that you may have never considered, and are a great way to ensure that they deliver to you everything that you wish for.

5. Can You Keep Me in the Loop throughout the Process?

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A common complaint I hear about real estate agents is that they don’t keep their clients informed throughout the buying and selling process. It doesn’t take much to write an email or make a quick phone call. Little things such as monthly statistics showing how many people viewed a property online, or daily emails about what’s going on with a current offer, will help keep you informed and impressed throughout your experience with your agent.

6. Are You Going to Waste My Time?

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If you’re busy, you probably don’t have all the time in the world to view new properties or to show potential buyers your home. The greatest real estate agent in the world understands these things and will show you that they do in fact care. Often, real estate agents are not able to provide enough time for you to prep your home for a viewing; but a good agent should try their best to inform you as soon as they know of a possible viewing.

If the agent takes you out to view properties, it would be best if they picked you up from home and have the entire list of the day’s homes to be viewed, including routes, mapped out. A great real estate agent could even go as far as to email or fax the details about the entire day’s events, a few days before hand – so you know exactly what to expect.

7. How can I sell My Home Faster?

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If you are a seller in a hurry to sell your home, a good real estate agent will know what is needed in order to do so. A great real estate agent will know what is needed to sell your home quickly and at a price you are comfortable with. Your real estate agent should know how to clean-up and stage your home so that potential buyers will notice the fine aspects that the home has to offer and not the bad ones. Great agents will know what most buyers want and will let you know what to expect by keeping you consistently informed.

The greatest Real Estate Agent in the world will likely have a lot more to offer than the 7 suggested characteristics listed above. Most importantly, they’ll exceed all of your expectations and convince you that you’d be mistaken if you didn’t use them to buy or sell your next home, or didn’t refer your friends and family to them. Tell your agent what they can do to exceed your expectations and the great ones will deliver every time.

Romy Rynar: See Available properties Here