Investor Cash Is Forcing Home Prices Down
Posted on | January 27, 2012 | No Comments
Based on a recent survey, cash buyers were to blame for the driving down of home prices. The survey showed that 1 out of 3 home buyers are cash buyers, and they make the home prices go down by paying in straight cash. Paying in cash is a strategic way to negotiate your desired terms. Rich inventors are buying foreclosed properties in cash, but at bargain prices. Cash inventors doubled against the last two years and is currently accounting for one third of all real estate sales. The increasing number of foreclosure properties drive down the prices of homes in most markets. The average sales price of homes went to its lowest level in a long time last month.
First time home buyers could benefit from the low prices, but lending institutions are being strict with regards to loan approvals. Cash investors are particularly interested with the foreclosed properties because they can take advantage of a good deal, and ask for a bargain price. Your average home buyer just doesn’t have the cash on hand to take advantage of these deals.
Sales of pre-owned homes rose a bit in January, and the number of first-time buyers went down 29% to its lowest level in two years. Foreclosure sales are making up 37% of all real estate sales. Cash transactions are 32% of all home sales – twice as high than the previous two years. In Florida, Arizona and Nevada, where foreclosures are especially rampant, sales of at-risk homes are 2/3 of total home sales. In Florida alone, foreclosure sales accounted for 63% of all sales in January. In Florida and Arizona, the number was closer to 72%.
First-time buyers are having difficulty in acquiring houses even if it is at a low price because lenders have tightened their standards for credit approval. This made mortgage loan approval harder to acquire. Banks and lenders are now requiring a bigger down payment when purchasing a house, unlike before where buyers could get a house with little or no down payment at all. The average down payment went up by 22% last year in 9 key cities in the US.
Mortgage Rates Are At An All Time Low
Posted on | January 19, 2012 | No Comments
In the U.S., the 30-year fixed average monthly mortgage rates have gone down to an all-time low of 3.94% from 3.99% against the previous week and against last year from 4.83%. The same goes for the 15-year mortgage rate from 3.21% to 3.27% against the previous week and 4.17% from last year.
Regardless of the low rates, the demand for housing is still weak and unstable. Actual sales are actually lower than the sales forecast, and prices are still dropping. The low interest rates permit lenders to offer their best deals, while borrowers are experiencing a difficult year in terms of meeting the criteria for lending. Still, some home buyers are able to take advantage of the low mortgage rates.
However, these rates are not helpful for a large portion of potential home buyers. This is because they can’t take advantage of the current rates because banks and lenders have tightened loan rules and credit standards. Even with the low rate, loan applications dropped 4.3% against previous week. The same goes for refinance applications, which went down by 5.2%.
In England, the average mortgage rate payment is 494 Euros a month, making it their best mortgage deal in a decade. Records from ten years ago showed that 2008 had the highest mortgage rate. It appears that home buyers could actually cope with England’s base rate should there be any changes on the interest rates or circumstances. Those who would grab the low mortgage rate said that they already have plans in case the rates go up again. Their strategies are cutting down “lifestyle” expenses such as clothes, shoes, holiday trips, dining out, etc to balance mortgage increase. The Bank of England’s forecast is that lenders will widen their mortgage range followed tougher and stricter lending rules. The Bank’s latest survey found that lenders are designing a better deals made especially for small-time depositors. Small-time depositors are first time buyers and this new great deal will somehow help them acquire property. Nevertheless, lenders believed that overall approvals for loan application may drop due to low credit approvals brought about by tighter loan rules following unstable economy and euro crisis.
Questions About The Foreclosure Crisis, PT. 2
Posted on | January 17, 2012 | No Comments
After writing part one of this two part post, The Federal Reserve came out with additional guidelines for banks to help those homeowners that are underwater in their loans or undergoing a foreclosure. I wanted to see what the response from banks would be as well as if the Fed would let us in on the influences they have over banks.
It dies seem that there are a few states including Florida where the banks are attempting to “buy back” properties from home owners but I haven’t seen a lot of activity or press on this attempt. There also is an uptick in the amount of foreclosures and many say this is due to back log that happened from the robo signing debacle early last year.
But what disturbs me the most in all this is the Federal Reserve’s participation. Whether you like Ron Paul or not he is bringing a lot of things to light about the validity of the Federal Reserve. There seems to be no accountability in place to audit and “see where the money is going”, which is a gross oversight of our government that should be corrected.
I challenge you to find out what part the Federal Reserve played in the recent crisis. I also challenge you to find out how the banks, who supposedly lost millions if not billions of dollars, have made money when they are losing so much in housing and credit cards based on the current economy. The numbers do not add up. My dad was a math teacher and one thing he used to say was this; “Numbers DO NOT LIE!”
America needs to get at the bottom of the numbers game and find out what is really going on. Though it may not affect you this time, your name might be on the list the next go round if we don’t stop it now.
Ask questions, ask questions and ask more questions until our representatives make it a point to get us the answers.
Questions about the Foreclosure Crisis – Pt. 1
Posted on | January 3, 2012 | No Comments
After posting the last time in early November I have been asked at least a dozen times about loan modification and foreclosures. In an attempt to answer those who contact me better, I made a few calls and did some research of my own and the next few posts are going to reveal some very interesting questions that I could not find answers to anywhere I looked or with those I spoke to.
Unlike the previous post, this is not about mortgage relief programs. This is about the crisis around mortgages and foreclosures and why I am coming to the conclusion that this entire housing issue was a setup. I say this because there is way too much information that cannot be readily found having to do with the relationship between the banks, the Federal Reserve and Insurers. In fact, if you were to go search right now you will pull up little outside of regulatory information about the relationship between the bank foreclosures and the Fed. However, there is reason to believe they have a very close relationship. What it is, I can’t be sure but I sure do have some questions that I think need to be answered and over the next few weeks I will get to that.
But first, I would like to ask you a question; If I owed you $1,000 and was making payments of $50 to you a month then I lost my ability to pay you back that much would you negotiate with me to get as much of your money back as possible? I am making a leap here and saying that most sane people would, in fact, negotiate with me.
Now let’s say I bought a rare coin from you for $1,000 and it ended up not being so rare at all and was found to be worth only $500. I contacted you after paying you $100 of what I owed you and let you know that the value of that coin was not $1,000 as we both believed and that I am willing to just return the coin to you or negotiate and pay based on the REAL value of the coin. If this was the case then you might have several options based things that I might or might not know.
First, you may want the coin returned knowing you can shine it up and sell it to another sucker for that $1,000 price tag. You can also just renegotiate the payment based on the $500 real value of the coin. However, if you had an agreement with a coin collector that said he guaranteed the value of the coin at $1,000 no matter what, you could in essence take the first $100 from me, get the coin valued at $500 back and take it to the coin collector who guaranteed it at $1,000 and get that much from him; PLUS keep the coin to resell for another $500.
Because I didn’t know there was a guarantee placed on the value of the coin, I would think your best option is to renegotiate with me and get $500 for the coin; it’s real value. After realizing the relationship you have with this coin collector (who by-the-way manufactured the coin in the first place)it makes sense to me that you would take the $100, the $1,000 and then resell the coin for another $500; turning a $1,000 coin into one worth $1,600.
With this in mind go watch this excerpt from 60 Minutes called There Goes the Neighborhood and just think about decisions the banks are making in this community.
Need an Out Of The Box Solution to a Foreclosure Or Loan Modification?
Posted on | November 10, 2011 | No Comments
As someone who successfully did a home loan modification several years ago, I know how difficult it can be. However, after listening to a webinar in regard to home loan modifications and foreclosure options earlier this week, I’m not so sure I would do the modification today.
With all the options and amount of information on different foreclosure and mortgage relief programs that pop up all the time, it’s hard to know what to do or where to turn. Believe it or not, from my limited research, there are well over 250 “mortgage programs” for either loan modification or foreclosure relief being advertised or offered. Some are government related, some are through law firms and others through non-profits groups or consumer advocate groups or agencies.
Which ones are legit? What is the best one for your situation? Who can you talk to that can help you figure out what to do? All legitimate questions that any smart person would ask.
First of all, do not call me! I am not the right person to talk to about this. However, I feel good recommending you to a website called www.relieveyourdebt.com. There you can read about the different scams other people have had the pleasure of going through as well as the 2 to 3 programs that are recommended for people who need some type of mortgage relief.
I have only listened in on one of the webinars and Mr. Doug Johnson, the debt relief advocate who is vetting these programs and helping people get exposed to them, recommends to every person that they listen to ALL the webinars, thus all the options for their given situation. Once you have been exposed to the programs you have the best and latest information to make a decision to see if one of these programs is for you or not.
I know Doug is not an attorney because I asked him. He’s just a guy who has seen the damage done by banks and financial institutions over the years and has decided to do the research and help people. You can read more about Doug here.
For those that know me personally, you know I don’t a have problem thinking out of the box and these programs are out of the box programs. Sometimes, it’s just what you have to do.
Benefits of FHA Mortgages
Posted on | October 26, 2011 | No Comments
It is everyone’s dream to one day own a home. The biggest problem that you may face is the high cost of the houses in your area compared to what you can afford or a payment too high. One advantage most people have is there are still many home mortgages available in the market today. It is important that you are able to choose the best type of mortgage for you and your family to avoid a lot of stress. That means you want or need a way to repay the loan and know you can do it until it is paid in full or you decide to sell the home in the future. One of the best types of mortgages for this purpose is the FHA mortgage.
One of the benefits of the FHA mortgage is that the down payment is quite a bit lower than almost every other type of mortgage today. The rates are also very competitive with current rates you hear about from your local lenders. You can also get the down payment money from many sources that are not allowed by other types of mortgage loan products. For example; you can borrow the down payment from your 401k or get a gift from a family member. This helps a lot of people that could not get the down payment with traditional means still get into a home and secure a mortgage.
One of the great things about the FHA mortgage is, unless you request a variable rate, you will get a 30 year fixed loan. That makes it easier to budget long-term to pay the loan back. Though FHA is more lenient with their credit score requirements, the lender may have additional requirements of their own that you have to meet. Make sure you talk to your lender to find out what their requirements are before you commit to using them.
With this type of mortgage you also need not worry about mortgage insurance because the mortgage insurance is usually approved automatically once the FHA mortgage is approved. This does not mean you are not paying for mortgage insurance it’s just that you have already been approved for it with the FHA loan.
The last benefit is that this type of loans is it allows sellers to contribute an amount to the closing cost within the regulations provided. This can greatly reduce the amount you need for closing.
Refinance Now To Lock In Low Interest Rates
Posted on | October 20, 2011 | No Comments
After a decade of good news, the real estate market has been depressed for the last four years. The big drop on prices has left many homeowners just as depressed. While home values are not growing at this time, there are still steps you can take to set yourself up for big savings on your home now and in the future.
While the real estate market is still in the process of stabilizing, there is a definite silver lining that all homeowners should be taking advantage of these days. Interest rates are at truly historic lows. What kind of numbers are we talking about? How about rates on a fixed loan of 3.7 percent and another full point below that for variable loans. Think about that for a moment. When in your life have rates been so low? It is staggering. Looking a few years down the road, the rates on home loans will have nowhere to go but up. When they return to the six or 7 percent level, how happy will you be that you refinanced your loan and locked it in at a 2 or 3 percent level?
Can interest rates go any lower on these loans? Nobody knows for sure, but it seems doubtful since inflation is starting to rear its ugly head. I really don’t have to tell you this because you already know. Have your grocery bills gone up? How about the cost of clothes? The simple fact is when the government prints money to revive a dormant economy, it eventually leads to inflation. To fight inflation, the Federal Reserve Bank will have to raise the rates it charges banks to borrow money. The banks will then pass along that increase to the mortgage market. Refinance now and lock in the incredibly low rates that will probably not occur again in our lifetime.
Why Good Design Matters when Selling a Home
Posted on | October 14, 2011 | No Comments
Your home is not just a place to stay, but it’s really the place where you live. It is the place where you live your life with your friends and family. The people that are near and dear to your heart. In short, your home is actually a major part of your life.
Because of it’s importance, you should make sure it is well designed; inside and out. If you eventually decide to sell a home, then you should remember this: you are not only selling the structure. You are also selling a place where someone else will spend their life. They will certainly want to spend it in a nice home. Research shows that a home that has a good interior design is more likely to catch the eye of potential buyers. If you set up the interior design of your home with the visual effects in mind, you are more likely to sell your home quickly.
These days, most people like the interior style to be a mix of new trends and traditional ones. When people are looking to buy a home, they generally ask questions like these:
- What kind of area is the house located in?
- What is the interior style of the house?
- What type of landscape surrounds the property?
- When was the home built?
- How will it stand up to natural disasters?
These are a few of the important questions that are frequently asked by home buyers. If your home can properly satisfy these questions, then you are more likely to sell your house for your preferred price. Most people want their home to act as a statement of their style. This is only possible with the help of good interior design. So, when you want to sell your home, don’t try to do it all on your own. Call an interior designer today.
Buying Second Homes
Posted on | October 7, 2011 | No Comments
You don’t hear much about buying second homes these days because most people are just trying to hang onto the home they have. However, if you are one of those people who are doing okay and have always wanted a vacation home or a second home on a lake within a days drive, now just might be the time.
According to my sources, finding a house that meets your needs or wants is pretty easy right now as that market has been depressed as well and there are some very good buys out there just waiting for the right buyer. On the other hand, the mortgage is another story. If your first home is paid off it’s relatively easy to obtain a mortgage on a second home. However, if you have an existing mortgage on a home, getting another mortgage has some strict requirements based on the type of loan and the amount of money you are putting down on the home. You will need to check and double check with the loan or mortgage officer you are utilizing for the loan.
Of course, here in Nashville, there are several areas where you can buy your first home and never feel like you have to leave to be on vacation! There are many small neighborhoods that back up to the Cumberland River, The Harpeth River or Old Hickory Lake that have homes for sale and are available. Being able to swim, canoe, kayak or go water skiing or fishing right out your front or back door is a real treat. You can have a second home feeling in our primary home.
Unfortunately, not every area has the luxury of having this much water and sport around so they will have to settle for buying a second home; if they need and can qualify for a mortgage.
Home Loans- Avoiding Pitfalls and Ensuring Your Financial Security
Posted on | September 29, 2011 | No Comments
There comes a time in every person’s life when buying a home seems the right thing to do and, for that to happen, getting a loan is the most likely manner to achieve such goal. Having your own house where you will be raising a family and live happily ever after is always an exciting dream, but the problem is sometimes all that excitement blinds people and drives them to make irrational decisions they will come to regret in the future.
When applying for a home loan, it is extremely important to avoid pitfalls and to collect the necessary information you need in order to choose a lender that provides advantageous terms&conditions. First of all, avoid signing a contract with a loaner that doesn’t provide clarity of terms, as it is crucial to perfectly understand what you’re signing for and have everything explained before signing the contract. Any ambiguous or unclear terms might is likely to indicate that the loaner is not trustworthy and reliable, so you should look somewhere else.
Not getting a loan pre-approval is another pitfall you should avoid when applying for a home loan. You should know for sure if you are eligible for the loan you plan to obtain, given the multitude of factors and criteria the approval is based on. Don’t get all too excited of having found the house of your dreams but no lender to give you the money you need because you have a bad credit score or bankruptcies on your credit history. Make sure you are not wasting time and money looking for a house you’ll not be able to pay for.
Also, pay close attention to the interest rate on your loan. Find out what you will be charged after the initial rate period expires. Usually, this happens after maximum three years, after which you will be charged the prime rate at that specific moment, plus additional fees. It should be all in the contract you’re signing, so make sure you avoid these pitfalls when applying for a home loan.
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