January 25th, 2011 · No Comments
Here’s another great article from Serena Powers:
Renters Have Much to Gain by Pursuing Home Ownership
Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.
Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.
The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!
However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.
In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.
To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.
There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.
Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.
Buying a home with a fixed mortgage guarantees that your monthly payments will stay the same in the ever-changing market. You have made a great deal if the real estate market’s interest rate raises. If it reduces, however, you have some things to think about in terms of whether you should refinance to guarantee the lower rate.
You have to bear in mind the percentage point break first. What is the difference between the rate you’re currently paying and the real estate market’s current rate? The general rule is you should only think about refinancing when your mortgage rate is at least one full percentage point higher than whatever the current market rate is, despite what may otherwise seem like an attractive reduced rate.
It is also important to note what your mortgage lender plans to charge you in transactions fees. When you decide to refinance, these are the rates you will be charged. If the fees are high enough, you might lose all or most of the benefits you would have gained in refinancing in the first place. It is definitely something to take into consideration.
You might be rejected, so keep this in mind, as well. It really is not such an uncommon thing, since over 50% of Americans are looking for refinancing options at the moment. In the first half of 2008, for instance, more than half of the refinancing applications were not approved.
Another factor to think about logically follows. You need to meet certain criteria in order to refinance. If you want to get the best refinance rates, you need to have a strong credit score. While 720 is still thought by many to be a high FICO score, it might not be good enough to get you the rate you truly want when refinancing. The goal would be to have a 740 or higher in order to get those low rates you’re looking for.
You also have to shop around, as a final note. A rate offered to you by one mortgage lender might not be your best choice. You can only be truly certain by talking about your options with different mortgage lenders and doing your own homework, as well. It is really the best way to get yourself the lowest rate possible, even though it will take time. Because this is what you really were looking for anyway, believe that the time is worth it.
Contact www.themnlistingsite.com for more information on refinancing your home in minnesota.
The property values have been increasingly steadily over the last few years but even in these economical difficult times it is still possible own your own home. The following few tips will be helpful for those who are attempting to obtain a home loan.
A lot of the times those seeking to buy new homes will be able to discover some great products designed specifically for low down payments and small incomes. If you can look for those home loans that offer great deals from banks in South Africa. The negotiation is always an option, too. Do not be afraid to try to haggle over a better deal.
The repayment period of your loan can be prolonged from 20 years to 30 years. It will help you to reduce or lower the monthly installments enabling you to handle a larger loan amount. However, if you take a larger loan amount for a longer period much of your amount will be paid towards interest only.
For those who cannot qualify for a loan on their own, they can have a co-signer. A person you are close to, whom you can rely on, and they on you, would be an ideal candidate for co-signing on a mortgage loan. The bank will base their decision of whether you qualify on both of your credit scores and histories. They will also add together your two gross incomes when determining if you meet the income criteria.
Naturally, everyone wants to get the most home they can for the least amount of money, which is, of course, in opposition to the home seller, who wants the most money for their home. This inherent conflict is one of the things that makes real estate sales… challenging at times. While it used to be quite common to hear sellers say things like, “But my neighbors house sold for x dollars last year!”, sellers seem to be getting more realistic when it comes to their home’s value, as depressing as that may be.
When you pay for your loans, it can be noted that your gross monthly salary must be 3 or 4 times the loan amount that you pay every month. Loans work in a way that the lender sanctions you the loan such that the loan amount you pay will be only 20% to 30% of your monthly income. This is done so that the loan doesn’t deprive you of paying for your essential commodities. To not become disappointed at low loan sums granted to you, make sure you do the math beforehand as to what the sum is.
Good credit is valuable. Having the ability to borrow funds allows us to buy things we would otherwise have to save for years to afford: homes, cars, and a college education. Credit is an important financial tool, but it can also be dangerous, leading people into debt far beyond their ability to repay. That is why learning how to use credit wisely is one of the most valuable financial skills anyone can learn.
Over the next three months, the U.S. Census Bureau is going to hire about 1.2 million temporary workers. The seasonally adjusted impact of these numbers will be massive, so don’t overreact positively when the news makes headlines a few months from now.
Nonetheless, we believe that positive job creation is getting ready to occur as most of the leading indicators point to solid growth ahead, and recent job loss figures have been only slightly negative. Job creation is going to be driven by big companies who have downsized significantly, as well as small businesses who will slowly return to growth mode.
Since the length of unemployment in the labor force is still hovering near 30 weeks, (the record high since the Bureau of Labor Statistics began tracking the statistic in 1948), we also believe that job-growth-focused government stimulus will continue.
Methodology
1. We collect a complete history on 70-plus variables and forecast the important ones by forecasting each metropolitan statistical area (MSA) and rolling it up.
2. In this monthly e-mail, we publish the current stats along with the historical minimums, maximums and averages as a service to the industry.
3. Each indicator is graded based on a bell curve where an “A” is its historical best, a “C” is its historical average, and an “F” is its historical worst. The grades are designed to provide a simple tool for decision-makers to scan the data.
4. Each of the eight categories has a grade that is nothing more than the average of the grades under it.
Economic Growth: D+
Overall economic growth was about the same this month compared to last, and the results for our economic growth metrics were mixed. The revised fourth-quarter gross domestic product growth rate increased to 5.9 percent from the preliminary estimate of 5.7 percent. Much of the growth was still the result of recent government stimulus and an increase in inventories.
The pace of job losses also eased this month, although in the last 12 months the United States has lost 3.24 million jobs, which is equal to a decline of 2.5 percent of the total payroll workforce.
The unemployment rate remained flat this month at 9.7 percent, while the broader measure of unemployment, the U-6, increased to 16.8 percent. (According to the bureau, the U-6 includes two groups that the U-3, which is the typical unemployment rate, does not: “marginally attached” — i.e., discouraged — workers and those employed part time for economic reasons.)
The length of unemployment in the labor force declined slightly to just under 30 weeks this month, yet remains the second-highest month on record since the BLS began tracking the statistic in 1948. Personal income improved in January and has returned to positive year-over-year growth for the first time since December 2008, increasing by 1.1 percent.
The Consumer Price Index (all items) decreased to 2.6 percent from one year ago, while the Core CPI (minus food and energy) also dropped to 1.6 percent.
Leading Indicators: C
Overall leading indicators held relatively steady this month, but several individual metrics actually improved. The Leading Economic Index six-month growth rate declined in January to 9.8 percent from 12.2 percent last month, and remains very high compared to history
It is amazing to me that appraisal companies are implying or accusing licensed Realtors who provide broker price opinions for lenders of devaluing properties.
In our part of the country, the appraisers are the ones who are giving low value to properties, even in cases where the buyers and sellers have agreed on the price. I thought that was what a free market was about.
Our local Realtors are more familiar with the local market than the appraisers, who often come into our market from a different area.
The North Carolina Real Estate Commission does limit licensed real estate agents when doing BPOs. BPOs must only be done when the Realtor is attempting to secure the business of the principal seller, whether it is a builder or a lender.
We acknowledge that we are not appraisers and a complete appraisal must be done by a licensed appraiser.
Thank you for keeping us updated
Mortgage rates are expected to rise gradually as the Federal Reserve left a key short-term interest rate untouched Tuesday, but said it would wrap up $1.25 trillion in purchases of mortgage-backed securities this month.
In a statement, the Federal Open Market Committee said its target for the federal funds overnight rate will remain in the range of zero to 0.25 percent, as inflation is likely to remain “subdued for some time.”
Although household spending is expanding at a moderate rate, the committee said it remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit.
The Fed’s purchases of mortgage-backed securities (MBS) guaranteed by Fannie Mae and Freddie Mac have helped keep interest rates near historic lows in the last year.
Although the committee said the Fed will wind up its MBS purchases at the end of the month as planned, it has no immediate plans to sell off the bonds it’s purchased, which would put additional pressure on mortgage rates (see story).
In a forecast published Monday, economists with the Mortgage Bankers Association predicted that mortgage rates will rise gradually for the remainder of this year, and stay on an upward trajectory in 2011 and 2012.
The MBA forecasts that rates on 30-year fixed-rate mortgages will rise to an average of 5.4 percent during the second quarter and reach 5.8 percent in the final three months of the year. MBA economists expect the 30-year fixed-rate loan will average 6.2 percent in 2011 and 6.4 percent in 2012.
When mortgage rates reach 6 percent, that will “significantly slow refinance activity,” MBA economists said in commentary accompanying their forecast, “but should not slow the modest housing market recovery we are forecasting.”
The MBA predicts sales of existing homes will climb by nearly 4 percent this year from 2009, to 5.34 million, and reach 5.72 million in 2011. Sales of new homes are expected to bounce back from a record low of 372,000 in 2009 to 398,000 this year and 528,000 in 2011.
An estimated 7.5 million homeowners are behind on their mortgage or in the foreclosure process, and another 1 million homes are bank-owned (also known as real estate owned or REO) after being foreclosed on by lenders, according to a new report from Lender Processing Services Inc.
The LPS February 2010 Mortgage Monitor report, which is based on data extrapolated from the company’s servicing database, showed that the pace of delinquencies was slowing, but that the U.S. delinquency rate remains at an all-time high of 10.2 percent.
All told, 13.5 percent of active loans were delinquent or in foreclosure, LPS said. The states with the greatest number of non-current loans were Florida, Nevada, Mississippi, Arizona, Georgia, California, Indiana, Michigan and Ohio.
Loan servicers modified the terms of 2 million loans in 2009, including Home Affordable Modification Program (HAMP) trial modifications, LPS said. But an even greater number of loans — 2.5 million — that were current at the beginning of 2009 are now more than 60 days delinquent or in foreclosure, the report said.
The report also showed that loan servicers are waiting longer to foreclose on delinquent loans.
Nearly 23 percent of loans delinquent for 12 months have not been moved to foreclosure status, compared with 9 percent in 2008. More than 31 percent of loans that have been delinquent for six months are not yet in foreclosure, either, the report said.
The average loan age of newly delinquent loans is now 46 months, as compared to an average newly delinquent loan age of 27 months in January 2007. During January 2010, 346,000 borrowers became delinquent for the first time, representing approximately 40 percent of all newly delinquent loans for the month.
March 16, 2010 – (RealEstateRama) — With the quickly receding snow cover exposing last year’s leaves and other dead vegetation, yard clean-up isn’t far behind. The Minnesota Department of Natural Resources (DNR) reminds homeowners that spring is fire season, and to think safety first when disposing of yard waste.
The safest way to dispose of yard waste is to recycle or compost it. However, homeowners who choose to burn yard waste should try to accomplish this while snow still blankets the area.
Three inches or more of continuous snow cover drastically reduces the chance a fire will escape and burn unintended areas. A DNR burning permit is not required under snow-covered conditions, but local city and municipalities may require a permit at all times of the year.
Spring fire restrictions will soon take effect and will severely limit open burning. The restrictions are weather dependent, but normally last from four to six weeks until summer green-up.
Most wildfires happen during April and May and more than 95 percent of these fires are caused by human error. Past experience has shown thatspring fire restrictions dramatically decrease both the numbers and sizes of these “escaped” fires. If the DNR or a fire department is called on to put out an escaped fire out, the homeowner is responsible for the costs.
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