NEW YORK – April 15, 2013 – For most would-be homebuyers, making a run at homeownership is going to mean getting approved for a home loan.

It’s a process that, at best, can be stressful and confusing. Borrowers can be better prepared by taking steps to study their options and learn what to expect from a lender.

“It’s surprising to me that people tend to spend more time in pre-purchase research for a car than they do for a home mortgage,” says Chris George, president of home mortgage lender CMG Financial.

Keeping up to date on changes in the mortgage market is necessary, because the government, which essentially backs 90 percent of new home mortgages, keeps tweaking the guidelines for the loans it will guarantee.

Just this week, the Federal Housing Administration put into effect several new mortgage rules, including one that raises the cost of mortgage insurance for borrowers who take on FHA-backed loans, among other changes.

Here are six tips for improving the chances that the mortgage math will add up in your favor:

1. Build a strong credit score
One of the main factors that lenders look at to determine a borrower’s creditworthiness is, aptly, their credit score.

Bad borrower behavior, like late credit card or other loan payments, having a foreclosure or bankruptcy in one’s credit report and carrying high balances will weigh down your credit score.

Most banks sell the home loans that they make to government-owned mortgage companies such as Fannie Mae and Freddie Mac. To do that, those lenders must adhere to certain lending criteria.

Loans backed by the Federal Housing Administration (FHA) will accept FICO scores below 600, but expect to pay a significantly higher interest rate the lower your score. A stellar score ranges from 760 to 850 and can give you greater negotiating power over the terms of the mortgage and ultimately, the total cost of the loan.

One way to mitigate the impact of a low score: Make a higher down payment, George says.

If your credit is less-than-stellar, make sure you give yourself time to rack up good credit history well before you attempt to apply for a home loan. This starts by checking your credit.

Consumers are entitled to a free credit report every 12 months from each of the credit bureaus: Experian, TransUnion and Equifax. You can get copies at http://www.annualcreditreport.com.

2. Know your loan options
Apart from increasing the chances of qualifying for a loan, making a down payment of at least 20 percent of the sales price or appraised value of the home will spare you from having to pay private mortgage insurance.

If you can’t afford that, you might qualify for financing on an FHA-backed loan. Those loans allow borrowers to make a down payment of as little as 3.5 percent of the purchase price. That’s great if you’re a first-time buyer and haven’t saved up for a bigger down payment. But to protect itself from potential loan defaults, the FHA requires lenders to charge extra fees to cover monthly mortgage insurance payments.

Until this week, the FHA had dropped the mortgage insurance requirement for homeowners with 30-year loans who made payments for five years and managed to bring their loan-to-value ratio to 78 percent. Now, borrowers with a loan-to-value ratio between 78 and 90 percent will be able to stop making mortgage insurance payments after 11 years. But those borrowers who still have a loan-to-value ratio greater than 90 percent will be required to pay mortgage insurance for the life of the loan.

“No matter how much of your loan you pay down, you’ll always have to pay that insurance premium, and that’s pretty significant change,” says Rick Sharga, senior vice president at mortgage lender and servicer Carrington Mortgage Holdings.

Another change that went into effect: The FHA is requiring that borrowers put down at least 5 percent on home loans of $625,000 or more. That’s up from 3.5 percent, but actually less than the 10 percent down that most lenders require.

3. Consider making a larger down payment
Given the prospect of not being able to get out of paying private mortgage insurance, some experts say borrowers who can afford to put down more than 3.5 percent on a home should consider getting a loan that’s not backed by the FHA, sometimes known as a conforming loan.

Such a loan typically only requires that the borrower make a 5 percent down payment. Although that means you still would have to pay private mortgage insurance, at least you’re not locked in, notes Jack Guttentag, Wharton School professor of finance emeritus and founder of http://www.mtgprofessor.com, which offers advice and online calculators for weighing different mortgage scenarios.

That mortgage insurance can be cancelled automatically when the loan-to-value hits 78 percent. “You’re generally better off getting a conforming loan,” Guttentag says.

4. Keep an eye on fees
In addition to a down payment, you’ll also have to set money aside for closing costs, which can run into the hundreds or sometimes thousands of dollars.

Lenders charge all manner of fees, some of which are negotiable, while others are not. They are required to itemize all fees required to close the deal, so review them carefully.

Your bank could charge you to cover items such as credit reports, appraisals, documentation and administrative costs. The total expense will vary depending on where you live and your particular situation.

Also, if you end up with mortgage insurance, that could cost $100 or more a month, depending on the type of loan.

5. Wait for a good deal
Rising home prices and warnings, usually trumpeted by lenders, that interest rates will soon rise can create a sense of urgency to purchase a home. But if your finances and credit score are not solid enough to enable you to qualify for a loan at an affordable rate, it’s best to not rush into buying.

To boost your chances of getting a good deal on a home loan, Guttentag recommends having a credit score of 740 or better, making a down payment of 20 percent.

6. Comparison shop
It’s prudent to get a feel for what different mortgage lenders will offer. After all, getting a home loan is not unlike getting financing for a car. There is some room for negotiation, says George.

He suggests borrowers approach lenders and state what kind of loan term and interest rate they want, and how much of a down payment they’re willing to make. Borrowers also should ask what can be done to accomplish this with the least amount of points, or fees that can be charged based on a percent of the loan amount.

As leverage, it’s best to have quotes from competing lenders, which can be obtained on several websites. They may be enough to sway the lender to match more favorable terms offered by the competition.

http://www.clearwaterbeachflhomesforsale.com/

WASHINGTON – April 12, 2013 – Average U.S. rates on fixed mortgages fell sharply this week and moved closer to historic lows, keeping home-buying and refinancing attractive.

Mortgage buyer Freddie Mac said Thursday that the average rate for the 30-year fixed loan fell to 3.43 percent from 3.54 percent last week. That’s near the 3.31 percent reached in November, which was the lowest on records dating to 1971.

The average rate on the 15-year fixed mortgage dipped to 2.65 percent from 2.74 percent last week. That’s slightly above the record low of 2.63 percent, also reached in November.

Low mortgage rates are helping sustain a housing recovery that began last year. Home sales and residential construction are up, prices are rising and more Americans are refinancing. That’s helped the broader economy.

Mortgage rates have been low because they tend to track the yield on the 10-year Treasury note. The yield has fallen in recent weeks and went as low as 1.71 percent April 5, after a weak report on March hiring drove investors to seek the safety of a U.S. Treasury bonds. When demand rises, the yield falls.

On Thursday, the yield was up to 1.79 percent, still low by historical standards.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year mortgages was unchanged at 0.8 point. The fee for 15-year loans also was steady, at 0.7 point.

The average rate on a one-year adjustable-rate mortgage edged down to 2.62 percent from 2.63 percent last week. The fee for one-year adjustable-rate loans slipped to 0.3 point from 0.4.

The average rate on a five-year adjustable-rate mortgage fell to 2.62 percent from 2.65 percent. The fee held at 0.5 point.

Homes-for-Sale-300x286

A seller’s ability to sell their home in today’s real estate market will be determined by both the supply of homes for sale and the demand for that housing. In real estate, supply is represented by the current month’s supply of homes for sale (the number of homes for sale divided by the number of homes sold in the previous month).

While there is no steadfast rule that will apply to pricing in every category of housing, here is a great guideline:

1-4 months’ supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed.
5-6 months’ supply creates a balanced market. Historically home values appreciate at a rate a little greater than inflation.
7-8 months’ supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.
What is happening across the country right now?

In most parts of the country, supply is dropping like a rock. According to the National Association of Realtors, total housing inventory is below a five months’ supply. This is almost 20% below inventory numbers of just a year ago and at levels we haven’t seen since 2005.

Based on the table above, we can see that the supply/demand ratio is showing a sellers’ market where prices appreciate. This has created positive movement in housing values in most parts of the country.

Sellers have a great opportunity right now. Historically, inventory increases dramatically as we approach summer. Selling now while demand is high and supply is low may garner you your best price.

The value of your home is increasing in today’s market, contact us and we will let you know by how much! 727-463-0387

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With interest rates still being low and home prices starting to rise that means if you are a buyer who is thinking about making a purchase now is the time to get out there and start looking!

WASHINGTON – April 5, 2013 – Average U.S. rates on fixed mortgages crept closer to their historic lows this week, a trend that could help the housing recovery strengthen.

Mortgage buyer Freddie Mac said Thursday that the average rate for the 30-year fixed loan edged down to 3.54 percent from 3.57 percent last week. That’s near the 3.31 percent reached in November, which was the lowest on records dating to 1971.

The average rate on the 15-year fixed mortgage declined to 2.74 percent from 2.76 percent last week. The record low of 2.63 percent also was reached in November.

Low mortgage rates have contributed to a housing rebound more than six years after the bubble burst. Home sales and construction are up, prices are rising and more Americans are refinancing. That’s helped the broader economy.

Sales of previously owned homes in February reached the highest level in more than three years. Some of the demand has come from investors. Sales to first-time homebuyers remain below healthy levels.

Some people are unable to take advantage of the low mortgage rates, either because they can’t qualify for stricter lending rules or they lack the money for larger downpayment requirements.

There also is concern that the limited number of available homes for sale could slow sales at the start of the spring buying season.

The low supply and increased sales have helped drive prices higher. Home prices rose 10.2 percent in February compared with a year earlier, according to real estate data provider CoreLogic. The annual gain was the biggest since March 2006. Prices have now increased on an annual basis for 12 straight months, underscoring the recovery’s steady momentum.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year mortgages was unchanged at 0.8 point. The fee for 15-year loans also was steady, at 0.7 point.

The average rate on a one-year adjustable-rate mortgage edged up to 2.63 percent from 2.62 percent last week. The fee for one-year adjustable-rate loans rose to 0.4 point from 0.3.

The average rate on a five-year adjustable-rate mortgage fell to 2.65 percent from 2.68 percent. The fee declined to 0.5 point from 0.6.

If you’re in the market to buy a new home now is the time before prices get too much higher!

WASHINGTON – April 3, 2013 – U.S. home prices jumped in February by the largest amount in seven years, evidence that the housing recovery strengthened ahead of the all-important spring-buying season.

Home prices rose 10.2 percent in February compared with a year earlier, CoreLogic, a real estate data provider, said Wednesday. The annual gain was the biggest since March 2006. Prices have now increased on an annual basis for 12 straight months, underscoring the recovery’s steady momentum.

The gains were broad-based. Prices rose in 47 of 50 states and in all but four of the nation’s 100 largest metro areas. Delaware, Alabama and Illinois were the only states to report price declines.

CoreLogic’s measure of national prices also rose 0.5 percent in February from January. That’s a solid increase during the winter months, when sales typically slow.

An increase in home sales has helped lift prices. In February, sales of previously owned homes reached the highest level in more than three years. Still, much of the demand has come from investors. Sales to first-time buyers remain below healthy levels.

Another reason prices are rising is the supply of available homes for sale remains extremely low. In January, it reached a 13-year low.

The supply of homes for sale did rise in February for the first time in 10 months. That suggests more people are gaining confidence in the housing recovery, which could help ease supply concerns and drive sales higher in the coming months.

The price gains were concentrated in the West, according to CoreLogic. The states with the biggest price gains were Nevada, where prices rose 19.3 percent, followed by Arizona, with 18.6 percent, and California, with 15.3 percent.

Hawaii and Idaho rose 14.6 percent and 13.5 percent, respectively.

The cities with the biggest gains were Phoenix, Los Angeles, Riverside, Calif., Atlanta and New York.

Nationwide, home values were still down more than 26 percent from their peak in April 2006 through February, CoreLogic said.

Steady increases in prices help fuel the housing recovery. They encourage some homeowners to sell homes and entice some would-be buyers to purchase homes before prices rise further.

Higher prices can also make homeowners feel wealthier. That can encourage more consumer spending, which drives 70 percent of economic activity.

WINDERMERE, Fla. – April 1, 2013 – A young couple, both doctors, thought they had themselves a deal when the owners of a Windermere house agreed in January to sell it for $460,000 – $15,000 below the asking price.

But then the property appraisal came back for $130,000 less than the buyer and seller had agreed the house was worth. That killed the deal.

“My buyers went and bought something else,” Lake Mary real-estate broker Nancy Pombo said. “And those people who were selling that house were looking at buying another house – they wanted to downsize.” Instead, they took the house off the market.

“It’s like a chain reaction,” she said, “and it’s affecting buyers and sellers.”

Mortgage companies routinely require appraisals on home purchases to help ensure that a lender can get its money back if a buyer later defaults on the loan and the lender has to sell the property. But appraisals are particularly challenging in a fast-changing market, such as the current one, because they are based on previous sales.

In the core Orlando market, for example, resale prices have risen more than 10 percent in just the past six months – more than they usually increase during an entire year when the market is stable.

“Buyers and sellers are agreeing to prices that haven’t been supported with current sales,” said Brian Watkins, president of Accusured Management LLC, a residential-real-estate appraisal-management company based in Longwood. “The appraisal may be $4,000 down from the sales price, and each side [buyer and seller] ends up compromising on something.”

No one tracks the gaps between appraised values and contract prices on home sales, but in a survey released in January of 3,586 real-estate agents nationwide, about 10 percent of the agents reported sales that had been canceled during the previous three months because of appraisal problems; 10 percent also reported that sales prices had been driven down by appraisals; and 10 percent blamed appraisals for delaying some deals.

Appraisers know that home values are rising again, but they’re reluctant to demonstrate that in their appraisals for fear of push-back from lenders, according to the survey, issued by the National Association of Realtors.

Joyce Potts, a longtime Orlando appraiser, said the industry has come full circle from the days leading up to the peak of the frenzied real-estate market in 2007 – a time when banks sometimes suggested to appraisers what the value of a house should be so that the loan would be approved.

“Most appraisers didn’t know how to start if they didn’t have a prescribed number to hit. … When banks were rewarding appraisers for hitting the number, it exacerbated the [housing] bubble,” Potts said.

“Now we’re going in the entire opposite direction.”

Appraisal reforms swept the nation in 2009 after New York State’s then-attorney general, Andrew Cuomo, filed a complaint against an appraisal company, which ultimately led Fannie Mae and Freddie Mac to implement what they called the Home Valuation Code of Conduct.

The code sought to distance appraisers from lenders by putting “appraisal-management” companies between them. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 replaced the code with standards that now allow lenders to establish their own appraisal-management firms, though the law continued to call for a firewall between appraisers and lenders.

New homes for sale can be particularly challenging for appraisers because newly built houses have been increasing so much in price.

“With low interest rates, builders are trying to expand their profit margins. And the cost of labor has gone up because there are not as many people available to do the [construction] work,” said Sean Calegan, owner of A.A. Appraisals Inc. in Oviedo.

Also, buyers are often willing to pay a premium for a home that is completely new and can be customized, he said. But appraisers, to protect against a builder setting artificially inflated prices within a new-home community, will use resold homes and houses sold by competing builders as the comparable sales in their report, he added.

Watkins, owner of the Longwood appraisal-management company, said homebuilders complain that it’s unfair for appraisers to set the value of a new house based on prices paid for nearby foreclosed and “short-sale” homes. But some areas are so saturated with such distress sales, he said, that they do define the neighborhood.

“If the market is riddled with foreclosures, then that’s what’s setting the market pace,” he said. “The rule of thumb is: Whatever the majority of sales are, that’s what you’re going to try to use for comparables.”

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