Improving housing affordability along with low mortgage interest rates means that home owners are paying a lot less these days for their monthly mortgage payment than they did just a few years back. Homeowners are paying nearly 40 percent less on their monthly mortgage payment than home owners paid in 2006.
According to Fiserv, the monthly mortgage payment for a median-priced single-family home today is $700, a drop of close 40 % from the high of the real estate market in 2006, when it was $1,140.
Housing affordability has improved dramatically because of declines in both prices and mortgage interest rates. Nationally, purchase mortgage payments now account for only 13 percent of monthly median family income, the lowest percentage on record (since 1971), and compared to 23 percent in the first quarter of 2006."
Friday, November 11, 2011
Wednesday, November 9, 2011
Credit Scores: 5 Things That Matter
Since your credit score is obviously super-important, and is derived from your personal credit history, you may feel justifiably confused by why you should have to pay 20 bucks to see it. The explanation for that I can summarize with one word: lobbying. The financial services lobby in this country is one of our democracy’s most powerful. To get a fair shake for consumers in virtually anything has always been an up-hill battle. In the case of getting a free look at your credit report, for example, it took years. In the case of being able to see your credit score, it hasn’t happened yet.
Payment history (35%) – This is your track record of paying back what you borrowed. Accounts in collection, late payments, and bankruptcy are bad; paying on time for a long period is good.
Amounts owed (30%) – This is based on the total amounts you owe, and the ratio of what you’re allowed to borrow to what you currently owe, called your “utilization ratio.” Maxing out your credit hurts it; keeping a lot of unused credit available helps it. Ideally, you want to keep your utilization ratio below 30 percent. So if you have a credit card with a $1,000 limit, you’d want to keep your balance below $300.
Length of credit history (15%) – This considers the length of time each credit account has been open, and when each account was last updated with payment or usage info. As you might imagine, the longer your history, the better. This is why if you’re going to cancel a credit card, all things being equal, ditch the newest and keep the oldest.
New credit (10%) – This includes recent inquiries and requests for credit. Regularly applying for new credit cards or other loans will cost you.
Types of credit used (10%) – There’s all kinds of credit out there, from revolving (credit cards) to installment (car and home loans.) Fair Isaac likes you to be well-rounded and sample them all. In short, diversity helps.
Monday, November 7, 2011
Benefits of Prelisting Home Inspections
Can I really obtain the home inspection in advance? The process seems to be useless since the prospective buyer gets the mortgage and then pays for his or her own inspection. It would seem like a good selling point if the property already had a clean inspection or the indicated repair were already taken care of. Michelle A.
You absolutely can and should obtain an inspection on your home before you put it on the market. Given the way mortgage lending guidelines have tightened up and the fact that appraisal and condition issues are killling a larger number of transactions, obtaining a prelisting inspection differentiate your home from the competition and boost your home's chances of selling by helping satisfy prospective buyers that the property will:
1. Prelisting inspections won't make the deal, but they can help optimize your chances of closing the deal. Buyers are not going to buy a house they wouldn't consider otherwise because it has reports, but if they are debating between your home and another property, a house with no issue, documentation that needed repairs have been completed, or even reports showing what needs doing and a corresponding discount can persusade buyers off the fence.
Many homes fall out of escrow because of condition issues not discovered until the transaction is underway. Sometimes, advance inspection reports can surface issues, allow you to get repairs completed and thus avoid that fatal issue. However, at other times, prelisting inspections show issues too big for you to have repaired that will be deal-killers for almost any mortgage lender. In this case, you do yourself the favor of forgoing even bothering trying to get it past a mortgage lender and empower yourself to list it as a cash-only sale for a fixer-upper price.
2. Your prelisting inspection won't replace the buyer's inspections. To be clear, whatever inspection(s) you obtain won't be the inspection, it will just be an inspection. You don't want the buyer to rely totally on it and forgo his own due diligence for liability reasons; your aim is to either verify the place is in good shape, clear the place of major repairs or brief them on why the property is being priced in that way and what they'll need to do (or won't need to do) later, assuming you can negotiate an as-is offer.
But you also want the buyer to still obtain his own inspections, so he can attend, ask questions, select the inspector and not fault you for anything that is missed. And you should work with your listing agent to require that the buyer sign your written advice to get his own inspections, as well as to make the property available to the buyer for just that purpose.
You absolutely can and should obtain an inspection on your home before you put it on the market. Given the way mortgage lending guidelines have tightened up and the fact that appraisal and condition issues are killling a larger number of transactions, obtaining a prelisting inspection differentiate your home from the competition and boost your home's chances of selling by helping satisfy prospective buyers that the property will:
- Pass the lender's and appraiser's condition guidelines;
- Not have surprise condition issues arise during the sale process and escrow; and
- Be in a condition that reflects to the price they've agreed to pay for it.
1. Prelisting inspections won't make the deal, but they can help optimize your chances of closing the deal. Buyers are not going to buy a house they wouldn't consider otherwise because it has reports, but if they are debating between your home and another property, a house with no issue, documentation that needed repairs have been completed, or even reports showing what needs doing and a corresponding discount can persusade buyers off the fence.
Many homes fall out of escrow because of condition issues not discovered until the transaction is underway. Sometimes, advance inspection reports can surface issues, allow you to get repairs completed and thus avoid that fatal issue. However, at other times, prelisting inspections show issues too big for you to have repaired that will be deal-killers for almost any mortgage lender. In this case, you do yourself the favor of forgoing even bothering trying to get it past a mortgage lender and empower yourself to list it as a cash-only sale for a fixer-upper price.
2. Your prelisting inspection won't replace the buyer's inspections. To be clear, whatever inspection(s) you obtain won't be the inspection, it will just be an inspection. You don't want the buyer to rely totally on it and forgo his own due diligence for liability reasons; your aim is to either verify the place is in good shape, clear the place of major repairs or brief them on why the property is being priced in that way and what they'll need to do (or won't need to do) later, assuming you can negotiate an as-is offer.
But you also want the buyer to still obtain his own inspections, so he can attend, ask questions, select the inspector and not fault you for anything that is missed. And you should work with your listing agent to require that the buyer sign your written advice to get his own inspections, as well as to make the property available to the buyer for just that purpose.
Friday, November 4, 2011
10 Cities Where List Prices Have Fallen the Most
The following are the 10 cities where median list prices have dropped the most, based on year-over-year Realtor.com data from September 2011.
1. Chicago
Year-over-year change in median list price: -11.56 percent
Median list price: $199,000
2. Las Vegas
Year-over-year change in median list price: -11.05 percent
Median list price: $120,000
3. Detroit
Year-over-year change in median list price: -10.01 percent
Median list price: $89,900
4. Ventura, Calif.
Year-over-year change in median list price: -9.09 percent
Median list price: $409,000
5. Atlanta
Year-over-year change in median list price: -8.63 percent
Median list price: $159,900
6. San Francisco
Year-over-year change in median list price: -8.63 percent
Median list price: $635,000
7. Santa Barbara-Santa Maria-Lompoc, Calif.
Year-over-year change in median list price: -8.35 percent
Median list price: $549,000
8. Sacramento, Calif.
Year-over-year change in median list price: -8.30 percent
Median list price: $210,000
9. Los Angeles-Long Beach, Calif.
Year-over-year change in median list price: -6.94 percent
Median list price: $335,000
10. Tampa-St. Petersburg-Clearwater, Fla.
Year-over-year change in median list price: -6.67 percent
Median list price: $140,000
1. Chicago
Year-over-year change in median list price: -11.56 percent
Median list price: $199,000
2. Las Vegas
Year-over-year change in median list price: -11.05 percent
Median list price: $120,000
3. Detroit
Year-over-year change in median list price: -10.01 percent
Median list price: $89,900
4. Ventura, Calif.
Year-over-year change in median list price: -9.09 percent
Median list price: $409,000
5. Atlanta
Year-over-year change in median list price: -8.63 percent
Median list price: $159,900
6. San Francisco
Year-over-year change in median list price: -8.63 percent
Median list price: $635,000
7. Santa Barbara-Santa Maria-Lompoc, Calif.
Year-over-year change in median list price: -8.35 percent
Median list price: $549,000
8. Sacramento, Calif.
Year-over-year change in median list price: -8.30 percent
Median list price: $210,000
9. Los Angeles-Long Beach, Calif.
Year-over-year change in median list price: -6.94 percent
Median list price: $335,000
10. Tampa-St. Petersburg-Clearwater, Fla.
Year-over-year change in median list price: -6.67 percent
Median list price: $140,000
Wednesday, November 2, 2011
Mortgage Giant Faces Big Trouble Over Bad Lending Practices
The U.S. Justice Department is suing Allied Home Mortgage, one of the country’s largest mortgage brokers, and accusing the company of fraud, according to a civil lawsuit.
The lawsuit alleges that the mortgage broker’s lending practices led to thousands of Americans losing their homes and “tens of thousands” of defaulted loans and cost the U.S government hundreds of millions of dollars in losses. The lawsuit accuses Allied of violating FHA mortgage insurance requirements, claiming it “profited for years as one of the nation's largest FHA lenders by engaging in reckless mortgage lending."
According to the lawsuit, prosecutors say about a third of the loans originated by Allied defaulted from 2001 through 2010, amounting to $834 million in insurance claims HUD paid. A staggering default rate of “a 55%” occurred in 2006 and 2007 alone, the lawsuit charges. About 2,509 more loans are currently in default, which could have HUD facing $363 million more in claims, according to the lawsuit.
“The losers here were American taxpayers and the thousands of families who faced foreclosure because they could not ultimately fulfill their obligations on mortgages that were doomed to fail,” attorney Preet Bharara said at a news conference Tuesday announcing the lawsuit.
The lawsuit alleges that the mortgage broker’s lending practices led to thousands of Americans losing their homes and “tens of thousands” of defaulted loans and cost the U.S government hundreds of millions of dollars in losses. The lawsuit accuses Allied of violating FHA mortgage insurance requirements, claiming it “profited for years as one of the nation's largest FHA lenders by engaging in reckless mortgage lending."
According to the lawsuit, prosecutors say about a third of the loans originated by Allied defaulted from 2001 through 2010, amounting to $834 million in insurance claims HUD paid. A staggering default rate of “a 55%” occurred in 2006 and 2007 alone, the lawsuit charges. About 2,509 more loans are currently in default, which could have HUD facing $363 million more in claims, according to the lawsuit.
“The losers here were American taxpayers and the thousands of families who faced foreclosure because they could not ultimately fulfill their obligations on mortgages that were doomed to fail,” attorney Preet Bharara said at a news conference Tuesday announcing the lawsuit.
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