Archive for April, 2011

With changes ahead for FHA down payments, private mortgage insurers seek inroads

April 29, 2011

Washington Post.com

Is the Federal Housing Administration losing some of its post-boom, post-bust oomph? Is the Obama administration’s plan to gradually throttle back the FHA’s home mortgage insurance volume already having effects? And if so, what might this mean to you as a buyer? There are definitely signs that something’s brewing:

1.Total applications for FHA-insured single-family mortgages are down 30 percent year to year through March, according to the agency’s data. Applications from prospective home purchasers are down 35 percent. The FHA’s popularity with buyers previously had sustained its high origination volumes.

2. The FHA put its second premium increase in six months into effect Monday. Higher premiums mean higher monthly payments for buyers and could have the effect of squeezing some consumers with tight budgets out of the market entirely.

3. The private mortgage insurance industry, which competes with the FHA for borrowers who make low down payments, is touting its newly resurgent conventional mortgage products, which may offer significant monthly savings when compared with the FHA’s.

4. Some of the agency’s long-standing advocates are wondering aloud whether the administration’s policy tilt toward more private-sector involvement in the mortgage arena may be hurting first-time buyers who can’t bring large cash resources or high credit scores to the table.

For example, Mario Yeaman, senior loan officer for Milestone Mortgage in Manhattan Beach, Calif., says, “Here you have our last refuge for ordinary people to buy a home, and the government is making it tougher to qualify” by raising insurance premiums.

Brian Chappelle, a principal of Potomac Partners, a District-based mortgage banking industry consulting firm, says he worries about the direction the FHA has begun pursuing: “FHA’s role was designed to be the first rung on the homeownership ladder. If you raise fees, increase down payments and lower mortgage limits, it would be a serious impediment for future buyers and the economy.”

Chappelle’s concern about higher down payments stems from the Obama administration’s February “white paper” on housing reform in which policymakers called for higher down payments across the board, including at the FHA. To date, no increases have been proposed by the agency, but some analysts believe that a move to a 5 percent minimum down — up from the current 3.5 percent — would not be surprising in the months ahead. The FHA’s maximum loan amounts might also drop significantly this October if Congress does not renew the current economic recovery law ceilings, which now top out in high-cost areas at $729,750.

Given these developments, how does the FHA financing stack up against rivals in the low-down-payment space right now? Private mortgage insurers have a quick response: They say their lower monthly costs already are winning back some of the business they lost to the FHA during the rough times of the recession.

For instance, Radian Guaranty, a major home loan insurer, claims that in the wake of the FHA’s premium increases, a conventional low-down-payment mortgage carrying its insurance coverage now requires monthly payments 15 percent lower than FHA-insured mortgages for borrowers with FICO credit scores above 720.

Radian provided this cost-comparison example to illustrate: Say you’ve got FICO scores above 720 and you need a $285,000, 30-year loan with 5 percent down at a 5 percent interest rate.

The FHA mortgage would cost $1,806 in principal and interest per month. The same loan insured by Radian would cost anywhere from $1,530 a month to $1,753, depending on the type of premium payment plan you choose. The cheaper alternative would involve an upfront cash payment of the insurance premium; the higher-cost alternative would involve standard monthly payments of the premium.

Brien McMahon, chief franchise officer with Radian, said in an interview that, as a general rule, private insurance on low-down-payment loans will now beat the FHA whenever the buyer puts down 5 percent and has a FICO score of 720 or higher or puts down 10 percent and has at least a 680 FICO score.

So does this mean that all buyers with low down payments should now abandon the FHA and switch to conventional loans? Hardly.

David Van Waldick of Western Realty Finance in Carlsbad, Calif., says the majority of FHA users can’t fit into the private insurers’ high-FICO, strict underwriting model, so those vaunted savings may be illusory. The FHA, by contrast, continues to offer much higher and more flexible maximum debt-to-income ratios, far more generous underwriting and lower down payments, and will accept FICO scores that conventional lenders and private insurers won’t touch.

If you’re purchasing a home with a small down payment, check out both the FHA and the private alternative with your loan officer. It’s true that the FHA has just gotten a little more expensive, but it may still have the total package you need to do the deal.

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“Jumbo” Mortgages Could Change Their Rules

April 28, 2011

ChicagoAgentMagazine.com

Beginning on Oct. 1, the government will dial back on the size of mortgages it guarantees in high-cost areas like San Francisco, New York and Washington. After that deadline, the maximum loan amount that Fannie Mae and Freddie Mac will back is scheduled to drop from $729,750 to $625,500.

“For people planning on exiting the market altogether (such as retirees), that is a compelling proposition,” Stan Humphries, chief economist at Zillow, told MSNBC. Home sellers may have to be patient to get the price they want. The curbs on government-backed loans could, at the margin, reduce the available pool of buyers, he said.

The deadline will mean $1 million buys a nice house, but not a mansion, for upper-middle-class buyers and sellers. Business is picking up in the high-end market; the National Association of Realtors reported that the sale of homes over $1 million were up 5.1 percent in March over the same month last year.

“We are seeing a normal recovery,” said Jed Smith, managing director of quantitative research. “I’m sure somebody will accelerate their activity (because of the expected drop in government-backed loan limits), but I doubt you’ll see a lot of acceleration because of that.”

According to MSNBC, the mortgage industry will have find a way around the changing rules of jumbo loans, because if they don’t, they will go out of business.

Mortgages that are too big to be sold to Fannie and Freddie are termed jumbo loans and are backed privately. Until 2008, according to MSNBC, all home loans over $418,000 were considered jumbo loans. In that year, a stimulus-focused Congress twice raised the limit on loans the government would back in high cost areas, first to $625,500 permanently, and then to $729,750, temporarily.

In 2010, so-called “jumbo conforming” loans, those over $417,000 and government-backed, made up 6.73 percent of loan originations, according to CoreLogic. That top temporary limit was extended twice, but is expected to expire at the end of September.

When that happens, lenders who want to make loans over $625,500 will have to hold onto the mortgage themselves or find private investors to buy them. And while an active and hungry secondary market for these jumbo loans has yet to materialize in the post-crash world, there’s some evidence that lenders are preparing to move into that space and pick up any slack that the government leaves.

“There’s plenty of money out there,” said Steve Hopps, chairman of the California Mortgage Bankers Association.

In the last quarter of 2010, private lenders originated more loans over $417,000 (the traditional jumbo market) than did government agencies. The lower loan limits will leave about $10 billion more in loans for private lenders to handle.

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The new FHFA Regulations: Good or Bad for Homeowner Associations?

April 28, 2011

ManagementTrust.com

Homeowner associations (HOA) exist to maintain the welfare of their communities.  To sustain such initiatives, HOA rules and regulations require a number of fees to be paid by residents.

Recently, the Federal Housing Finance Agency (FHFA) published a Notice of Proposed Rulemaking that will dramatically affect HOA’s. While the regulations cover a variety of subjects, there is much skepticism as to whether they are actually beneficial to the HOA’s themselves.

One of the most sweeping areas of reform aims to allow Fannie Mae, Freddie Mac and the Federal Home Loan Bank System to regulate transfer fees paid to investors, as well as to the associations themselves.  More specifically, the FHFA seeks to implement the prohibition of investor transfer fees nationwide. These payments, made to investors whenever a house is sold in a planned community, don’t serve any true purpose in context to helping and sustaining the community and its surroundings. The Community Associations Institute (CAI) has agreed that this change would be positive for homeowners.

The FHFA is also trying to pass regulations that are not necessarily beneficial for both homeowners and homeowners associations.  For example, community transfer fees have been in use for decades to minimize the financial burgeon of maintenance and any special assessments that may pop up out of the blue. Still, there is always a margin for error, and the FHFA aims to limit the use of community transfer fees solely for maintenance and improvements.  This regulation, if carried out, would in theory help to reduce the effects of irresponsible actions made by HOA board members, but it would also remove a great deal of the operational flexibly necessary for an association as a whole.

Of course, not every homeowners association is the same – and some may find it more difficult to tend to their community’s needs and wants with a decrease in flexibility.  More importantly, the homeowners themselves have the most influence over their HOA rules and regulations, and the benefit of this proposed limit is already supplemented by the voice of each individual resident; ineffective polices are always due to be replaced at some point or another.

Another limitation that would affect a HOA’s operational flexibility stems from regulation that would allow non-residents to use common areas for free.  This decision has traditionally been up to each association to determine the best steps to address this issue, with the consideration of homeowners’ unique and specific demands taken into account. Some homeowners may be more comfortable in certain situations than others, which is why homeowner associations avoid ‘one-solution-fits-all’ policies, and instead develop policies based on their community’s needs.

The last regulation proposed by the FHFA would prevent HOAs from voting to have a transfer fee for an area move farther than 1,000 yards from their property line.  Both the CAI and homeowners across the nation are vehemently opposed to this since it’s not a very logical option, especially for larger communities who often consist of a so-called master associations and a number of sub-associations.

The CAI has voiced displeasure over many of the FHFA’s proposed regulations – and for good reason.  Decisions made and carried out by an HOA are based on the good judgment of the homeowners and board members themselves. This scenario represents a majority of HOAs across the nation.

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Latest Press Release Regarding the State of the Economy per the Federal Reserve

April 28, 2011

FederalReserve.gov

For immediate release

Information received since the Federal Open Market Committee met in March indicates that the economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually.  Household spending and business investment in equipment and software continue to expand.  However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed.  Commodity prices have risen significantly since last summer, and concerns about global supplies of crude oil have contributed to a further increase in oil prices since the Committee met in March.  Inflation has picked up in recent months, but longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.  The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.  Increases in the prices of energy and other commodities have pushed up inflation in recent months.  The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations.  The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November.  In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and will complete purchases of $600 billion of longer-term Treasury securities by the end of the current quarter.  The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

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HUD Selects Lenders to Participate in New Pilot Program to Help Homeowners Pay for Home Energy Improvements

April 28, 2011

RISMedia.com

Eighteen national, regional and local lenders will participate in a new two-year pilot program that will offer qualified borrowers living in certain parts of the country low-cost loans to make energy-saving improvements to their homes. Backed by the Federal Housing Administration (FHA), these new PowerSaver loans will offer homeowners up to $25,000 to make energy-efficient improvements of their choice, including the installation of insulation, duct sealing, replacement doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems.

U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan and U.S. Department of Energy Secretary Steven Chu announced the participating lenders during a tour of a family-run company that offers home energy audits and upgrades in Long Island, New York.

“We believe the market is right for a low-cost financing option for families who want energy-saving technologies in their home,” says Secretary Donovan. “PowerSaver hits on all cylinders by helping credit-worthy homeowners finance these upgrades, cut their energy bills and boost the local job market in the process. While FHA and these lenders are jumpstarting this pilot, we hope its success will lead to a growing private sector interest in making these types of loans.”

Secretary Chu announces “we are breaking down barriers and making energy efficiency more accessible and more affordable. It’s the right thing to do for our environment, for our economy and for the pocketbooks of American families.”

The remodeling industry cites surveys that point to a growing demand among homeowners interested in making their homes energy efficient. Yet options are still limited for financing home energy improvements, especially for the many homeowners who are unable to take out a home equity loan or access an affordable consumer loan. Initially, the PowerSaver pilot program is estimated to assist approximately 30,000 homeowners to finance energy-efficient upgrades though higher market demand may increase this impact. According to HUD projections, more than 3,000 jobs will be created through this pilot program and the impact may be larger if market demand for the loan program increases over time.

Participating lenders are largely selected based on their commitment to work in partnership with established home energy retrofit programs provided by states, cities, utilities and home performance contractors. These markets include, but are not limited to, areas of the country participating in the Energy Department’s Better Building Program.

PowerSaver loans will be backed by the FHA but require these lenders to have significant “skin in the game.” FHA mortgage insurance will cover up to 90 percent of the loan amount in the event of default. Lenders will retain the remaining risk on each loan, incentivizing responsible underwriting and lending standards.

PowerSaver has been carefully designed to meet a need in the marketplace for borrowers who have the ability and motivation to take on modest additional debt to realize the savings over time from home energy improvements. PowerSaver loans are only available to borrowers with good credit, manageable debt and at least some equity in their home (maximum 100% combined loan-to-value).

HUD developed PowerSaver as part of the Recovery Through Retrofit initiative launched in May 2009 by Vice President Biden’s Middle Class Task Force to develop federal actions that would expand green job opportunities in the United States and boost energy savings by improving home energy efficiency. The announcement is part of an interagency effort including 11 departments and agencies and six White House offices.

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Mortgage denied: Sometimes, for no good reason

April 28, 2011

CNNMoney.com

Getting a mortgage just keeps getting tougher, and many homebuyers are getting rejected for loans they could easily afford.

The issue: Tighter standards from Fannie Mae and Freddie Mac, the government entities that back mortgages made by banks.

Banks are reluctant to make loans without the Fannie and Freddie guarantee, and loans backed by them account for just about every mortgage written these days.

In 2009, the agencies lifted the minimum credit score that borrowers must have from 580 to 620. That’s probably for the best.

But they’ve pushed through a host of other requirements as well, and that means real estate deals don’t get done, even for some relatively low-risk borrowers.

"You can have one Fannie/Freddie guideline you violate and that gets you rejected," said Alan Rosenbaum of GuardHill Financial.

A quarter of all mortgage loan applicants get denied for loans, according to the Federal Reserve. Many other potential homebuyers never even try to get loans, said Jerry Howard, president of the National Association of Home Builders.

"The pendulum has swung too far in the other direction," Howard said. "This overreaction is retarding the housing market recovery." (Homes: What a million bucks buys)

Here are some of the reasons that banks must turn down borrowers for mortgages:

Too few of the condos in your association have been sold

For Fannie/Freddie lenders to approve a mortgage to finance purchase of a condo, a large majority of the units — 70% — have to be already sold or under contract to individuals. Before 2009, the threshold was 51%.

If more than 30% are still owned by the company that built the complex or sponsored its conversion from rental units, the mortgage will be denied, no matter how qualified the buyer is.

Vulture investors flipping their way to big profits

The reasoning is that condo developments where the builders or sponsors still own a large share of the units are more likely to get into financial difficulty. If the builder or sponsor runs out of funds before it can sell off the units, it may stop paying the common charges and property taxes.

Struggling sponsors have also lost unsold units to creditors, which resold them off at bargain basement prices. That jeopardizes the values of all the condo units, sending borrowers underwater and making them more likely to default.

The agencies also refuse to fund condo loans if buildings face some pending legal liability, if more than 15% of owners are behind on homeowner dues or if more than 10% of units are owned by a single entity.

Your debt is too high

Fannie and Freddie have also increased their emphasis on income relative to debt.

If someone’s total debt payments exceed 45% of income, the mortgage will be denied. In 2009, the limit was 55%.

Using that as a hard and fast rule can penalize very qualified buyers, ones who should be able to meet their debt obligations.

Take, for example, a couple that wants to buy a second home as a rental. Two mortgage payments could easily push them past the 45% threshold, even though they’ll have rental income and home equity.

The 45% rule can also hurt small business owners who have had a couple of bad years. Their incomes may be down relative to their debt, but they may have plenty of cash to keep from defaulting on a mortgage.

The wait after foreclosure is extended to seven years from five

Some borrowers lost homes to foreclosure but then diligently rebuilt their financial health. Despite high credit scores, ample assets and income and steady employment, lenders are not allowed to finance their Fannie/Freddie mortgages if their foreclosures happened any time within the past seven years.

Before spring last year, the wait time was five years.

Missed payments on credit card debt

Fannie and Freddie also have gotten stricter in how they factor in missed payments on credit cards, auto loans and other debts in which the balances do not have to be paid off every month.

They used to be okay with a missed payment or two. Now, one missed payment will hit your debt-to-income ratio, because banks will add 5% of your outstanding loan balance to the debt part of the calculation.

That would be an extra $1,000 on a $20,000 student loan balance, for example.

Where to go

"Portfolio lenders will look at the entire credit history and see a blemish and say, ‘This has no impact on credit worthiness,’" said Rosenbaum.

They may offer rates and terms competitive with agency loans but if there are serious risk factors, loans can be more expensive, according to Bob Moulton, a mortgage broker with Americana Mortgage on Long Island.

"It’s a tough environment," he said "For people like the self-employed, mortgages can get pricey."

He recently arranged a mortgage for a private businessman through a savings bank. His client paid a rate of 7.9%, about three points higher than the average 30-year fixed. The rate is only good for three years, after which it resets and can rise by as much as two points annually and go as high as 13.9%.

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Mortgage denied: Sometimes, for no good reason

April 28, 2011

Getting a mortgage just keeps getting tougher, and many homebuyers are getting rejected for loans they could easily afford.

The issue: Tighter standards from Fannie Mae and Freddie Mac, the government entities that back mortgages made by banks.

Banks are reluctant to make loans without the Fannie and Freddie guarantee, and loans backed by them account for just about every mortgage written these days.

In 2009, the agencies lifted the minimum credit score that borrowers must have from 580 to 620. That’s probably for the best.

But they’ve pushed through a host of other requirements as well, and that means real estate deals don’t get done, even for some relatively low-risk borrowers.

"You can have one Fannie/Freddie guideline you violate and that gets you rejected," said Alan Rosenbaum of GuardHill Financial.

A quarter of all mortgage loan applicants get denied for loans, according to the Federal Reserve. Many other potential homebuyers never even try to get loans, said Jerry Howard, president of the National Association of Home Builders.

"The pendulum has swung too far in the other direction," Howard said. "This overreaction is retarding the housing market recovery." (Homes: What a million bucks buys)

Here are some of the reasons that banks must turn down borrowers for mortgages:

Too few of the condos in your association have been sold

For Fannie/Freddie lenders to approve a mortgage to finance purchase of a condo, a large majority of the units — 70% — have to be already sold or under contract to individuals. Before 2009, the threshold was 51%.

If more than 30% are still owned by the company that built the complex or sponsored its conversion from rental units, the mortgage will be denied, no matter how qualified the buyer is.

Vulture investors flipping their way to big profits

The reasoning is that condo developments where the builders or sponsors still own a large share of the units are more likely to get into financial difficulty. If the builder or sponsor runs out of funds before it can sell off the units, it may stop paying the common charges and property taxes.

Struggling sponsors have also lost unsold units to creditors, which resold them off at bargain basement prices. That jeopardizes the values of all the condo units, sending borrowers underwater and making them more likely to default.

The agencies also refuse to fund condo loans if buildings face some pending legal liability, if more than 15% of owners are behind on homeowner dues or if more than 10% of units are owned by a single entity.

Your debt is too high

Fannie and Freddie have also increased their emphasis on income relative to debt.

If someone’s total debt payments exceed 45% of income, the mortgage will be denied. In 2009, the limit was 55%.

Using that as a hard and fast rule can penalize very qualified buyers, ones who should be able to meet their debt obligations.

Take, for example, a couple that wants to buy a second home as a rental. Two mortgage payments could easily push them past the 45% threshold, even though they’ll have rental income and home equity.

The 45% rule can also hurt small business owners who have had a couple of bad years. Their incomes may be down relative to their debt, but they may have plenty of cash to keep from defaulting on a mortgage.

The wait after foreclosure is extended to seven years from five

Some borrowers lost homes to foreclosure but then diligently rebuilt their financial health. Despite high credit scores, ample assets and income and steady employment, lenders are not allowed to finance their Fannie/Freddie mortgages if their foreclosures happened any time within the past seven years.

Before spring last year, the wait time was five years.

Missed payments on credit card debt

Fannie and Freddie also have gotten stricter in how they factor in missed payments on credit cards, auto loans and other debts in which the balances do not have to be paid off every month.

They used to be okay with a missed payment or two. Now, one missed payment will hit your debt-to-income ratio, because banks will add 5% of your outstanding loan balance to the debt part of the calculation.

That would be an extra $1,000 on a $20,000 student loan balance, for example.

Where to go

"Portfolio lenders will look at the entire credit history and see a blemish and say, ‘This has no impact on credit worthiness,’" said Rosenbaum.

They may offer rates and terms competitive with agency loans but if there are serious risk factors, loans can be more expensive, according to Bob Moulton, a mortgage broker with Americana Mortgage on Long Island.

"It’s a tough environment," he said "For people like the self-employed, mortgages can get pricey."

He recently arranged a mortgage for a private businessman through a savings bank. His client paid a rate of 7.9%, about three points higher than the average 30-year fixed. The rate is only good for three years, after which it resets and can rise by as much as two points annually and go as high as 13.9%.

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What Home Buyers Really Want

April 25, 2011

Yahoo News

If your house is on the market then you might be at the point of tearing your hair out. After all, some sellers have had their home up for sale for years at this point. It can be maddening, and the competition is only getting more intense as prices continue to fall and more foreclosure homes flood the market.

So what, exactly, are buyers looking for this spring? In short, they’re looking for homes that are going to save them money. And when you think about it, it just makes sense. Mortgage loans are harder to come by, and thanks to an uncertain economy, people are less likely to splurge on a McMansion they’re going to have to pay to heat and cool for the next five years (i.e. save money on utility bills).

 

Even if you’re planning on staying in your home the next few years, it’s still helpful to know what people are looking for because you’re likely going to make changes and home improvements over the years. Knowing what potential buyers are interested in can help you invest your money wisely, so you have a better chance of selling when you’re actually ready. So what are people looking for?

1. Homes in Good Condition

Buyers aren’t interested in fixer-uppers right now. They don’t have a lot of cash, and they don’t want to spend money on home repairs immediately after they move in. They’re looking for homes that are in great condition and that are absolutely move-in ready. They don’t want to have to repaint, clean carpets, or cover up cracks in the ceiling. And they especially don’t want to spend money on major repairs. To increase your chances of an offer this spring and summer, make sure you do everything you can to get your home in tip-top shape. Utilize a house spring cleaning checklist and make your home spotless before showing it off.

2. Homes with Green Features

Saving money and living green are trends that aren’t likely to disappear anytime soon. Buyers are now looking for features which are going to cut down on a home’s operating costs, as well as lessen its impact on the environment. Tankless water heaters, high-efficiency furnaces, energy-efficient appliances, energy-efficient windows, adequate insulation, and solar panels are just a few that are making it on to buyers’ wish lists.

Basically, any "green" upgrade that’s going to save money on utility bills will be highly appealing to people looking for a new home. You probably don’t want to splurge on solar panels, a geothermal furnace, or other expensive green energy technologies, but there are some small changes you can make that will help potential buyers save money in your home. For instance, you could install a rain barrel or two against the house, add insulation, upgrade any old appliances to Energy Star rated models, and plant some trees to help with shading during the summer months.

 

3. Outdoor Living Spaces

In an uncertain economy, people travel less. This means that our homes are truly becoming our castles, no matter how small they are! Outdoor living spaces have always been popular, but they’re especially appealing now since so many people are taking staycations, and choosing to relax at home instead of going out at night and on weekends. If your backyard leaves a lot to be desired, then do whatever you can to turn it into an oasis. Build a deck, plant flowers, add a fountain, and turn it into an escape for potential buyers.

Final Thoughts

If your home is currently on the market, it’s important to do everything you can to remove any concerns buyers might have about your house. Sellers sure don’t want to continue spending money on their homes, but small changes such as planting flowers, repainting, and cleaning can go a long way towards getting you an offer. Remember, you don’t want to give people any reason not to buy your home!

Have you had any success selling your house in this market? What are some of the best methods that worked for you?

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Why First Time Homebuyers Are Opting Out And Just Renting

April 22, 2011

The Real Estate Bloggers

“No, it’s not for me, I’m not going to make the mistake that my parents made. They’re trapped in their homes, and I’m going to try to be more flexible.”

This phrase should curl the toes of every real estate agent in the country. This is a phrase that the demographer Cheryl Russell who is  studying what 25–29 year olds thinking about buying real estate has been hearing recently.

Yes those same 25–29 year olds that comprise a large part of the first time home buyers that we need so desperately to solidify the market. This may explain why the percentage of first time home buyers dropped from it’s normal 40% to 34% the past month.

The Los Angeles Times article goes on from there:

But I see a resurgence in rentership. As these renters get a little older, they’ll want more specific features in their rentals. If I were a developer, I’d be very interested in rehabbing single-family homes and then turning them into rentals, but I’d make them more attractive for these young adults by adding bathrooms. If they’re going to have to have roommates, they’re going to insist on having their own bathrooms.

Homeownership peaked in 2004 at 69%. We are now at 66.9% and Ms. Russell is expecting that number to drop to between 64% and 66% of Americans to own their own homes over the next few years.

The real estate industry has an expectation that American’s are driven to own their own home. The American Dream.

Well the next generation of first time homebuyers may disagree. They have seen how home ownership may lock someone into a regional area instead of moving to where the jobs are. They have seen the effects of lost equity. They also are facing an unprecedented amount of educational debt that is precluding them from entering the job market to begin with.

The loss of a good percentage of the first time home buyers is going to continue to put pressure on the American housing market for years to come.

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Mortgage Applications Up First Time in Month: MBA

April 20, 2011

CNBC.com

Applications for U.S. home mortgages rose for the first time in a month last week as interest rates eased and purchase activity picked up, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 5.3 percent in the week ended April 15.

That was driven by a 10 percent increase in the gauge of loan requests for home purchases, sending the purchase index to its highest level since early December.

The MBA’s seasonally adjusted index of refinancing applications gained 2.7 percent Fixed 30-year mortgage rates averaged 4.83 percent in the week, down from 4.98 percent the week before.

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