Prices still fell in the last quarter, but sales continue to climb. This is such an unusual combination that a Buyer’s market like this cannot last much longer.
I am also including a report from Morgan Stanley now owned by JP Morgan Chase Bank that discusses the effects of the economy if rates do fall to 4.5% which they are close to now. Please see the Rate report from Countrywide Home loans and the Tip of the week from Aaron Gordon, one of my preferred lenders. Aaron discusses tips to get offers accepted by the bank, and that they have to be written to cover costs that may be new to the borrower's side. It takes sharp and strong negotiations to get buyers what they want when the banks try to rule the deal. The Real Estate Agent needs to know what they can negotiate and what can’t be negotiated on the buyer’s side to make the deal work, but to still get the best possible price but fair deal for the Buyer.
The Political world is also discussing rates getting as low as 4% to further stimulate the economy and help re-finance out many loans that could end up in a “At Risk” scenario as the bank would say.
Many banks are aggressively re-modifying loans now, and working to approve short sales quickly verses the long delays we had seen in early 2008. I have had several borrowers tell me that they are being offered attractive deals to stay in their homes vs. short-sale or foreclose.
I am consistently adding new helpfull pages to my Website. Please see my new Raving Clients page, and the link to http://www.understandingforeclosureslasvegas.com/.
Any Questions please feel free to call or e-mail me anytime.
TIP OF THE WEEK : "HELP ELIMINATE THE BUYER'S CLOSING SURPRISE"
Last week, I wrote about how 3% may not be enough to cover your buyer's closing costs today on bank-owned properties especially on sales prices below $150,000.
This can create a financial surprise at close can create a delay in your closing or, even worse, jeopardize it.
Here are some tips for you to look for when reviewing your net sheet and getting a Good Faith Estimate, especially when you are hopeful to get back part or all of your earnest deposit money.
Taxes are higher today. Due to the dramatic depreciation in sales prices, many homes have property taxes that are far higher than "normal." Most lenders use automated systems that tell us the "average" property taxes for a home in that sales price. We based our Good Faith Estimates on that number. That number is often wrong. When you get pre-qualified, its important to send the lender the MLS listing that shows the property taxes or at least let the lender know who much the property taxes are for better accuracy.
County Taxes. The County usually collects between 4 - 6 months in property taxes in advance. If your Good Faith Estimate says anything less, call the County to confirm what will be collected at the time of your closing.
Foreclosure Fees. Many selling banks have fees related to your transaction that they are counting in your seller contributions. I have seen this fee as high as $1000. Be prepared. Ask your escrow officer to get a list of the selling bank's fees early in your transaction.
Transfer taxes. This tax, which is $5.10 per $1,000 or sales price, can be paid by the buyer, seller or both. However, some sellers, like Fannie Mae and Freddie Mac, will not pay this at all. Know who is paying this tax and communicate it to your lender.
Transfer taxes. This tax, which is $5.10 per $1,000 or sales price, can be paid by the buyer, seller or both. However, some sellers, like Fannie Mae and Freddie Mac, will not pay this at all. Know who is paying this tax and communicate it to your lender.
Prepaid property taxes. Some selling banks have paid the County the property taxes on the home they foreclosed on many months or quarters in advance. When you buy this home, they must reimburse the bank. I have seen banks that pay 2 -3 quarters in advance. This can be a big number that surprises the buyer at close. Get with your escrow officer to see how far in advance your selling bank is on their taxes.
HOA fees and HOA Transfers. We are seeing HOA fees and transfers much higher on bank-owned properties than on a normal buyer-seller transaction. Please confirm what's owed the HOA with your escrow officer as early in the transaction as possible.
Limits on seller contributions. Some selling banks, when they agree to pay closing costs, no matter how much they agree to pay, will still refuse to pay certain items like title fees, escrow fees, and more. Its important to get with your agent to see if the bank you are dealing with has any conditions like this before going over closing costs with your buyer.
The bottom line is we all have high expectations of customer service. We all want your transaction to be as smooth and problem-free as possible. The greatest threat to these high standards is a financial surprise at close or a buyer who is expecting a refund at close that doesn't come.
By understanding the unique nature and costs of dealing with REO properties and banks as sellers, we can all avoid financial surprises at close.
Gordon Team - Weekend Rate Report - January 16, 2009
WEEKLY RATE REPORT:
Although national news is reporting that rates are down from last week, which is incredibly the 11th week in a row they have declined, in this week-to-week report, which runs Friday to Friday, they have increased slightly. The national news reports rates from Wednesday to Wednesday.
The 30 year on a conventional loan is around 5.000%. FHA / VA - 5.250%. Jumbo loans over $417,000 around 6.125%.
Why are rates staying so low? The Fed is buying mortgage bonds. This is making it so mortgage rates stay down. The Fed is doing this to stimulate home buying.
Although refinancing is at a fever-pitch, these low rates are not stimulating purchases as hoped.
Refinances are up over 100% from this time last year.
WEEKLY RATE REPORT:
Although national news is reporting that rates are down from last week, which is incredibly the 11th week in a row they have declined, in this week-to-week report, which runs Friday to Friday, they have increased slightly. The national news reports rates from Wednesday to Wednesday.
The 30 year on a conventional loan is around 5.000%. FHA / VA - 5.250%. Jumbo loans over $417,000 around 6.125%.
Why are rates staying so low? The Fed is buying mortgage bonds. This is making it so mortgage rates stay down. The Fed is doing this to stimulate home buying.
Although refinancing is at a fever-pitch, these low rates are not stimulating purchases as hoped.
Refinances are up over 100% from this time last year.
NEW GUIDELINE ANNOUNCEMENTS THIS WEEK:
Some big announcements this week. Second mortgages are getting even more challenging to get unless you have excellent credit.
Fannie Mae announced risk-based pricing adjustments, based on credit scores, on their loans this week.
What this means is that if you plan on putting down 10-20% down to get a conventional loan, don't expect the 5.00% rate of today unless you have credit scores over 680.
There will be additional rate adjustments on you as your credit score decreases. Your rate today could be as high as 6.000% or 7.000% as you get closer to a 620 credit score.
Lower the credit score, the higher the rate, unless you do FHA or VA.
SUCCESS STORY OF THE WEEK: "Frankie, Janie and the Gamble"
Earlier this year, Frankie and Janie were buying a home using an FHA loan.
When I first discussed rates with Frankie, the 30 year was about 6.375%. He didn't like the rate. "Aaron, lets float," he said. Although I strongly suggested this was a bad idea, Frankie was adamant. "The Fed is lowering the Prime rate and mortgage rates are coming down too," he said.
I explained to him that the Prime Rate is an overnight rate in which banks loan money to each other. The Prime Rate is not directly tied to mortgage rates. Mortgage rates are tied to bonds. Frankie didn't care.
"Trust me, they are coming down!!" he said. Janie disagreed with him and wanted to lock too. However, she couldn't convince him either.
As his close of escrow quickly approached, the market turned for the worse. 6.500%. 6.625%. Then 6.750%. At each level, we spoke. "Just watch! It's coming down," he said.
It didn’t. When it came time to close his loan, the rate was still at 6.750%. Frankie requested an extension of escrow to allow more time for rates to drop. The seller declined. His loan closed at 6.750%. He was bummed but understood he took a gamble that didn't pay off.
When rates reached their historic lows, I immediately thought of Frankie and Janie. I called them and told them about the FHA Streamline Refinance. No appraisal. No credit report. No income or asset documentation. Low fees. A loan that can be closed in a few weeks and lowers your payment. It's about the easiest loan there is today.
Frankie locked at 5.000% for 30 years and saved $263 per month!! After he closed last week he called me and said, "I told you they were coming down!!!"
I can’t remember the last time I laughed that hard. He is certainly right. Rates are about as low as they are going to get. Lock when you can.
Some big announcements this week. Second mortgages are getting even more challenging to get unless you have excellent credit.
Fannie Mae announced risk-based pricing adjustments, based on credit scores, on their loans this week.
What this means is that if you plan on putting down 10-20% down to get a conventional loan, don't expect the 5.00% rate of today unless you have credit scores over 680.
There will be additional rate adjustments on you as your credit score decreases. Your rate today could be as high as 6.000% or 7.000% as you get closer to a 620 credit score.
Lower the credit score, the higher the rate, unless you do FHA or VA.
SUCCESS STORY OF THE WEEK: "Frankie, Janie and the Gamble"
Earlier this year, Frankie and Janie were buying a home using an FHA loan.
When I first discussed rates with Frankie, the 30 year was about 6.375%. He didn't like the rate. "Aaron, lets float," he said. Although I strongly suggested this was a bad idea, Frankie was adamant. "The Fed is lowering the Prime rate and mortgage rates are coming down too," he said.
I explained to him that the Prime Rate is an overnight rate in which banks loan money to each other. The Prime Rate is not directly tied to mortgage rates. Mortgage rates are tied to bonds. Frankie didn't care.
"Trust me, they are coming down!!" he said. Janie disagreed with him and wanted to lock too. However, she couldn't convince him either.
As his close of escrow quickly approached, the market turned for the worse. 6.500%. 6.625%. Then 6.750%. At each level, we spoke. "Just watch! It's coming down," he said.
It didn’t. When it came time to close his loan, the rate was still at 6.750%. Frankie requested an extension of escrow to allow more time for rates to drop. The seller declined. His loan closed at 6.750%. He was bummed but understood he took a gamble that didn't pay off.
When rates reached their historic lows, I immediately thought of Frankie and Janie. I called them and told them about the FHA Streamline Refinance. No appraisal. No credit report. No income or asset documentation. Low fees. A loan that can be closed in a few weeks and lowers your payment. It's about the easiest loan there is today.
Frankie locked at 5.000% for 30 years and saved $263 per month!! After he closed last week he called me and said, "I told you they were coming down!!!"
I can’t remember the last time I laughed that hard. He is certainly right. Rates are about as low as they are going to get. Lock when you can.
