Home sales continue to rise

Home sales continued to rise nationally climbing to over 6 million for the first time since February of 2007. More importantly compared to this time last year home sales rose over 23%. The news is likely to be even better in the local DC market. Realtors are telling me if a home is priced correctly in the "hot markets" that multiple offers are arriving within days of listing. If a home is still sitting for 30 days or more it's over priced, needs some TLC or may not be in the best market.
With unemployment over 10% and so many homes that are underwater it can be much harder to sell or refinance. Additionally HVCC is a total disaster and causing buyers and sellers heartburn. I am telling my clients now that it doesn't really matter what price you agree for the house it's going to come down to a (likely) out of market appraiser coming in and doing the quickest job he can. I also have never seen the amount of paperwork that banks now require it's truly different for each loan that is now in the closing stage. Even with the same lender we get different rules and requirements for loans closing within days of each other. There are several reasons that the home sales were so high. The first time home buyer credit was slated to end November 30th but has been extended thru June 30th 2010. It has also been expanded to include current homeowners but they do only get $6,500 thru June 2010. The income limits were raised as well to 125k for singles and 250k for couples. You can expect to see reduced numbers for the next 2-3 months, some of which is normal and some because of the glut of purchases that are now getting finished.

Of course mortgage rates are among the lowest in history.We are talking in the 4.85% range for conventional loans under 417k and 5.125% for jumbo if you have excellent credit. Most ads I see on the Internet combine two or three programs into one ad but believe me it's not one size fits all for loans these days. You have to talk a lender who takes the time to get the information that determines your rate. They are, credit, income, assets, reserves and what what type of home you want to buy. And don't forget about the down payment. As I wrote in last weeks blog I expect to see rates climb in March if not earlier when the Federal reserve stops feeding the artificial demand for MBS. Interesting note also, condos really jumped up at over 13% for the time period. Home prices still declined from last October but the decline was the smallest in more than a year though. Foreclosures are still driving prices down overall and will continue to do so for the next few years in certain markets. For example, I searched quickly with just one company that does foreclosure auctions. I found only two in the 20854 zip code and none in Bethesda. Germantown though had 7 different homes. To sum up alot of information some of which contradicts itself, I still feel that it's an extremely good time to buy a home. Rates are low, prices haven't jumped like in past years and there are tax credits available. There are also temporary loan limits that can help you get a good loan over 417k. For awhile it was impossible to get a rate of less than 8% on a jumbo loan until Fannie and Freddie stepped up. Yes you may see small decreases in price in the short term but if you are on a 30 year fixed at a rate of 5% or below does it really matter? Long term the investment pays for itself. Americans aren't treating their homes like credit cards anyway these days mainly because the banks won't let them. Will that return some day as banks and homeowners forget how bad it is right now? That is the only thing I am sure about as I write this.

Thanks,
Brent
Loan Officer

Now is the time to refinance or buy that home.

You hear it all the time but it still needs to be said. NOW is the best time in years to buy a home. Let me share with you a few reasons why.

1. If you are a first time homebuyer you get $8,000 to buy a home!! If you aren't a first time homebuyer you still get a $6,500 tax credit. You can get the money BEFORE you buy a home. Just make sure you return the cash if the deal doesn't close.
You have to have a contract by April 30, 2010 and close by June 30, 2010.
The government is literally giving you money to buy a home, they have increased the income allowed and raised the price of the homes that you can buy. If you are on the fence get off get a realtor and get your financing in place. I am biased but I think you need to get the financing in place before you start looking.

2. Fannie and Freddie temporary loan limits are just that; temporary. You can get a fixed rate in the low 5 range with no points or origination fee for a loan up to $729,750. You can buy a home thru FHA of 756k and only put down 3.5% if need be. This is in high cost areas only such as DC and the surrounding counties. The loan limits will go back down, last year it was almost impossible to get a good rate above 417k loan amounts. Don't wait until the government ends this program, end it must. If you need to know which county has which limits and for all the confusing rules click here.

3. Rates will likely rise March 2010 if not before and here is a brief explanation of why. In late September the Federal reserve basically said the economy was on the mend. I am not so sure but hey they are smarter than me right? That announcement should have sent long term interest rates, especially long term interest rates straight up and they should still be climbing. Usually bonds and mortgage backed securities (MBS) are sold in this environment. They usually are sold when inflation is slated to rise in the near future. So what happens? Of course interest rates actually fell. I think the reason is mainly because the rest of country isn't as sure about the recovery and more so because the FED is buying 1.45 TRILLION dollars of MBS thru March 2010. Remember trillion is the new billion. So the fed is keeping rates artificially low and they are also announcing that the program ends in March. Now they may extend it, they were supposed to end it Dec 31, 2009.

Numbers look like in certain areas prices are firming up and days on market are dropping for well priced homes and owned by reasonable buyers. Many people still seem to think it's 2005 for selling in the DC area and it's not that good yet.


Please let me know how I can help you take advantage of the low rates and tax credits. If you aren't sure I am right take a look at what others are writing and blogging. Ignore the general whole country articles, look for local DC information. I am also licensed in Florida and Delaware.

Thanks,
Brent

3.

FHA Changes

Well I was out on vacation last week so I didn't blog for the first time in months. I wanted to get back to let you know about more FHA changes, some just happened some take place Jan 1 2010. FHA changes that took place Wed November 18th.
In order to streamline without an appraisal you must have made at least six payments on your FHA mortgage. You can't have any lates in the last 12 months.
If you were late prior to the last 12 months you may only have one 30 day late and been on time the last three months.

You also must have a net tangible benefit such as reducing your monthly payment by at least 5%. You can also refinance if you are going from an ARM to a fixed rate or going from a 30 year to a 15 year term on the mortgage.

The biggest change is how the new loan amount is calculated. It changed from old original loan amount with MIP as the base to current loan amount. This is a HUGE change. It's also the outstanding principal balance minus the refund of the MIP.

This means that clients who want a good interest rate will suddenly bring thousands of dollars more to the table at settlement, which means that the time needed to recoup the money will be longer or for some people it means they simply won't be able to save money with a rate reduction. In this economy it might prove meaningful to save even $150 per month and now this has potentially been removed as an option.

There is a way around some of the new hurdles erected by the government.What I recommend is taking a higher rate and working with me to credit some of the fees back to you so you don't have to bring so much extra money to the table. It's not a perfect plan but if it saves you a large amount versus nothing it still make sense. Don't be discouraged, talk to me and ask before the rates begin to rise. Say a rate of 5% pays me 2k in gross fees. There isn't much I can credit to you. But if we raise the rate a bit and we make 5k in gross fees than we can probably credit you the 3k in fees to help you save something rather than nothing. So instead of 5% you get 5.25%. It may still be better than the 6.25% you currently have. Don't be discouraged, lets get creative and form a plan of action to save you money NOW before it's too late. Please let me know if you have any questions.

Thanks,
Brent

HVCC Update 3

If it seems that I write about HVCC quite a bit it's because I do. This is the number one issue preventing the housing market from a total recovery. There are other problems but make no mistake this trainwreck is hurting the very people that it was supposed to help. Please get on the phone with Congress and tell them how bad it is if you have been hurt by it. Don't think it affects you? Maybe unless you don't own a home and never plan on buying one. Here are two quick 100% true absolute horror stories that I am now dealing with because of HVCC. I have a client who lives in Chevy Chase DC. A very nice 28 year old brick colonial with all the bells and whistles. It appraised for only 930k while ramblers and split levels that were 80-90 years old were selling this summer for 1,049,000 and 1,028,000. Out of all the comps only one was a colonial. There were numerous errors such as getting the number of bathrooms wrong. I spent about a full day making my case, asking for help from a licensed appraiser and reviewing the material. The appraiser agreed and raised the value to 970k. I still knew the value was too low and wanted to check with the DC appraisal board. Lo and behold the appraiser wasn't licensed over 1 million so we never had a chance to get the value. Why as this done? Because HVCC happened and an appraiser knew the value, wanted to get paid and took the job when he shouldn't have. This would have never happened before HVCC. Now the clients 4.875% jumbo loan is in danger of not closing.

Story number two, ordered an appraisal on an expanded colonial in Silver Spring, MD and the appraisal took over two weeks to come back. When it finally did it came in 50k short. When I reviewed the appraisal, there were numerous errors because in part the appraiser was from north of Baltimore and unfamiliar with the local DC market. In fact he referred to Silver Spring as "Silver Springs" He lied to the client and told them he lived 20 minutes away minor things like this. I noticed that the name my client gave me for the appraiser didn't match the persons name that signed the report. After checking on the DLLR website it turns out that they sent a person who does not even hold an appraisal license with the state of Maryland. I have never seen this before and now again my client's low fixed rate jumbo that saves them $434 per month is in danger of not closing. All thanks to HVCC. Now the appraiser that signed the report is lying of course to save his very career.

One more quick story, on a sale a realtor just called me and told me that the appraiser didn't even enter the home and lied and said he did. The realtor knows because of the electronic lock box that reports who went in and when they did. Again all thanks to HVCC we have uncaring, unprofessional, unlicensed people from out of the market doing appraisals, harming borrowers, sellers, Realtors and mortgage brokers. Please call 202-225-3121 and let Congress know the real story.

Thanks,
Brent Mendelson
Loan Officer

Great news homebuyer tax credit extended and improved

The news we all wanted and expected is finally here. CNBC just announced the President signed it a few minutes ago. The first time homebuyer tax credit has been extended until June 30th 2010 for closings and April 30th 2010 to have a ratified contract. Another part of the expansion is the income limits have been increased to $125,000 for individuals and $225,000 for couples. The older limits were $75,000 and and $150,000 respectively under the current law. The current program expires for closings at the end of November. This will be a huge boon for the DC metro area as many people were simply making too much money to take advantage of the current program. We have 8 months to take advantage, please do not think that this program will be extended again. As the economy improves Congress will let programs like this expire and you will lose a major advantage. This will continue to cause a spike in the local DC area, some counties and cities are showing impressive gains with multiple offers and drastically lowered inventory. Take the Wooton school district in MD. I have had several Realtors tell me that there is simply no inventory in that highly regarded school district and that homes are moving in a matter of days with several offers.

As good as this news is there is even more. If you have owned a home for at least 5 years you now qualify for a tax credit of up to $6,500 when you buy a new primary residence. That will REALLY get people moving as long as the qualify under the same rules as first time homebuyers. More details will be released soon but if it works the same way you will be able to amend your taxes and receive the money to be used as a partial downpayment also. Credit is owed to Senator Ben Cardin (D-MD) for introducing the legislation and seeing it thru all the way to the President's desk.
If you have any questions about your home purchase in DC, MD, VA, DE or FL please feel free to contact me and we can get right to work.

Thanks,
Brent Mendelson
Mortage Broker