While some would see this as negative news, I call it a normal reaction to market influences and a step in the right direction. From my vantage point, I see a stronger and more balanced market. More homes in higher price ranges are selling now which happened far less frequently a year ago. But mainly I hear and see more optimism in the voices and eyes of customers…and the phone rings more often.

For an in-depth analysis of last months market activity, including actual sales numbers, charts, graphs…take a look at my latest Market Watch Newsletter.

The most positive result of slower market activity is that interest rates dropped to astounding levels. Last time I checked, the rate for a 3o yr conventional loans with NO buy-down points was 4.5%. And  for 15 yrs it’s 4.0%.  The rate for an FHA loan with only a 3.5% down payment to purchase is 4.375%. Those are amazing rates. Very good timing especially when you consider home prices are more affordable than they have been for years. Great circumstances for anyone who wants to purchase a home or refinance.

If you enjoyed this post, you may also be interested in:

1. Market Watch – July 2009 edition
2. Market Watch – May 2010 edition
3. Market Watch – June 2010 edition

It’s been interesting lately. I’m in the process now of showing homes to people who are trying to beat the April 30th deadline…and getting phone calls from others I know who are thinking about jumping in. One thing they almost all ask me is if I think the government is going to extend the deadline past April 30th? I honestly don’t think they will extend it…or even need to for that matter. The economy, as far as the housing market goes, is definitely heating up. I encourage anyone with questions to contact me. I’ll be happy to answer any inquiries about the tax incentive program or the market now.

The incentives would be nice to have I guess as long as you were going to buy a home anyway. But it’s never worth buying anything that you wouldn’t buy without them. And a deal isn’t really a deal if it means purchasing something at a time that wasn’t perfect, especially something as important as one’s home.

If you enjoyed this post, you may also be interested in:

1. Home Buyer’s Tax Credit
2. Opening Doors
3. Market Watch – May 2010 edition

PMI, or Private Mortgage Insurance, is a fact of life these days if a buyer wants or needs a mortgage to purchase a home that is greater than 80% of the purchase price. PMI insures the lender for the amount over 80% in case there is a default. Without this coverage, lenders would be hesitant to give a mortgage to anyone with a lower equity position. PMI simply reduces the lender’s risk.

A PMI pemium is based on the loan amount. Typically, on a median priced home, it adds about $50 to $100 per month to the house payment. That’s not a huge amount of money, and often well worth it in order to be able to purchase a home. PMI premiums however can add up to a lot of money over time. It’s good to know then that while PMI might be unavoidable for some, at least it’s something that doesn’t have to remain forever. Usually in about 5 years, the home has increased in value and the mortgage balance has been paid down enough that the combination of the two results in the mortgage balance being below 80% of the home’s value. Also, there may have been improvements or updates completed that have added value to the home further increasing the value. If this is the case, the homeowner can ask the lender to remove PMI. Due to laws passed in 1998, if the mortgage was obtained after then, the lender must remove PMI automatically. If someone feels they meet this criteria they can petition the lender to remove PMI without waiting for automatic removal. The lender typically will then order an appraisal. If the appraisal supports that the mortgage balance is below 80% then PMI will be removed.

There is a way possibly to avoid PMI altogether. Some lenders may offer a piggyback loan, like an 80-10-10. This is an 80% first mortgage loan plus an additional second mortgage for 10%, with the borrower investing 10% down payment, thus avoiding PMI. Some may even offer an 80-15-5 which would require only a 5% down payment. But sometimes the interest rate is higher for the second loan and/or it’s spread over a shorter amortization resulting in a total payment that’s actually higher than a single loan with PMI. You just have to do the math. There are income tax questions too that weigh in slightly. PMI is sometimes deductible and other times not, and everyone’s financial situation is different, so if someone really wants to fine-tune the answer on the differences or benefits of using a loan with PMI it’s best if they consult their tax professional or trusted financial advisor.

If you enjoyed this post, you may also be interested in:

1. Steady Rates
2. Lenders Have No Money?
3. Mortgage Survey

I’ve tracked mortgage rates from lenders for years, always to keep my knowledge current on the financing end of things. Just about every day, I receive rate updates from several different lenders. In years past I remember mortgage rates that were a LOT different than now-a-days. More than double what they are now. But mortgage rates lately have been steady for quite a while now at around the 5% level for fixed rate/30 year conventional mortgage loans. These are loans with no discount points and just standard closing costs for the borrower. Standard closing costs vary between lenders but typically run about $1,800 from a solid lender. They are just the normal costs necessary for a lender to process a loan request. The 30 year fixed rate mortgage is probably the most popular product that most people choose when financing a purchase or refinancing. More first-time buyers probably choose an FHA type 30 year mortgage because the down payment required is less…around 3.5% of the purchase price, compared to 10 to 20% down minimum using a conventional loan. FHA rates are usually just a bit higher but really worth it if down payment is an issue. Lots of times too, the seller will agree to pay some or all of the buyers transaction and loan closing costs, so it takes very little cash to buy a home. For a little while longer, there are tax credits for almost anyone who buys a home…first-time buyer or even long time owners. That program will expire though soon.

That’s at least one good thing about a slower economy. It puts downward pressure on interest rates. When the economy heats up again, which it will, the rates will go up. A hotter economy also will put upward pressure on prices. That added to higher rates means housing becomes less affordable. When rates are so steady and so inexpensive for such a long time, we all are spoiled by them. Relatively speaking, there probably has not been a better time to buy a home in the last 50 years or more. Lots of inventory to choose from, low prices, low interest rates and even tax credits. The perfect storm. We’ll look back later at this time and realize it was one of the best opportunities ever.

If you enjoyed this post, you may also be interested in:

1. PMI Details
2. Lenders Have No Money?
3. First-time Home Buyer Mistakes

What has dried up though are loans to individuals who’s credit scores are lower than decent. In the past, a number of lenders extended credit to some that they probably shouldn’t have. And what followed was a large number of defaults on those loans. So loan underwriting has become somewhat more conservative is all…not the supply of money. That is actually a good thing for everyone. It got really crazy for a few years. Example: There were types of loans available from some lenders called No-Doc loans or Stated Income loans…where all the borrower had to do was “state” or essentially make up an amount of income to put on the loan application. There were no checks, no documentation on the amount stated at all. The borrower did have to have real good credit scores to get the loan. But…come on. How many people do you think abused that?

Lenders have tightened up just a bit on credit scores for loans in general and underwriting has just gone back to the basics. Yes a few people can’t get home loans that want them, but there will be less defaults, less problems, and a more stable housing market for all of us in the end.

If you enjoyed this post, you may also be interested in:

1. PMI Details
2. Sunbeams
3. Steady Rates

I would think most people have heard at least something about the incentives available for first-time home buyers this year. Possibly though some don’t realize that anyone who has not owned a home for the last three years also qualifies.

The federal government is trying to stimulate housing market activity which has slowed over the last couple years. Simply put, if you qualify as a first-time home buyer, and purchase a home in 2009, you can receive up to $8,000 in the form of a tax credit on your federal tax return. Even if someone has already filed the 2009 return, it can be amended to get a refund. For more details and answers to questions, here’s a link to some more info First-time Buyer Tax Credit  If you feel like contacting me, I’d be happy to discuss it with you too.

Even though you might not be a first time buyer, this may still help you indirectly. First time buyers typically purchase lower priced homes. That sale frees-up the current owner who typically moves up to buy a home in a higher price range. Then, that sale could have the same result, causing a “ripple effect” all the way up the market.

I guess time will tell what impact it will have ultimately, but I know it is helping to open some doors now that wouldn’t have opened otherwise for people trying to purchase a home. Several people I’m working with have begun the purchase process with an eye toward using the incentive. Everyone’s financial situation is unique, so I always tell them to check with their tax professional early on to see how this program will apply to their own situation.

If you enjoyed this post, you may also be interested in:

1. Opening Doors
2. Tax Incentive Flurry
3. Market Watch – January 2010 edition