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Mortgage Interest Rates

by Leslie Edwards

Mortgage interest updates courtesy of Mark King, Fairfield Mortgage. For a quick response call Mark at 770.314.3991.

Email M.King@FairfieldMortgage.com

After reaching the lowest levels in decades, mortgage rates have shot higher over the past few weeks, but why?  The simplest explanation is that when investors look ahead, they see few reasons for mortgage rates to move lower and many possible causes for them to move higher.  To fully understand this explanation, though, it is important to understand the unusual developments during the month of November and to look at all of the factors influencing mortgage rates at this time.  

The story begins in late August when the Fed hinted that they would initiate a new stimulus program to purchase US Treasury securities, a process now famously known as quantitative easing.  The news of this stimulus program created a strong demand for bonds, including mortgage-backed securities (MBS), and mortgage rates fell lower.  Fast-forward to November 3rd when the Fed announced that they would indeed buy $600B. of US Treasury securities between now and the middle of 2011.  At that time, many predicted that rates would fall even lower during the winter months ahead.  A couple of days later, however, mortgage rates actually began to do the opposite and rose for the following four reasons:

1.  Foreign and domestic opposition to quantitative easing.  The announcement of the program was met with substantial opposition from other countries and from many US politicians and economists.  Investors had viewed the $600 billion figure as a first step which would likely be increased in the future.  It is clear now that the Fed will face strong resistance to an expansion of the program, in fact, this resistance could be strong enough to end the program early.  

2.  Stronger than expected economic data.  Stronger growth decreases the need for additional Fed stimulus, and it generally leads to higher inflation.  A few key reports released just after the Fed announcement caused investors to raise their outlook for economic growth.

3.  Concerns about lower foreign demand for US securities.  The quantitative easing program pumps dollars into the economy, and the increased supply weakens the value of the dollar relative to other currencies. When foreign investors sell US securities, they must convert the US dollars they receive into their own currency. If the value of the dollar falls, then the value of their US investment falls in relative terms to their own currency. As a result, foreign investors may reduce their purchases of US securities, including mortgage-backed securities (MBS), which would cause yields to increase.

4.  Rising foreign rates.  China's announcement of a rate hike was another negative for US mortgage rates.  Yields must rise in other markets to compete with higher yields in Chinese markets.

The recent news has not been uniformly negative for mortgage rates, however.  Current inflation levels remain extremely low.  In fact, the Consumer Price Index data released last week showed that annual core inflation dropped to a record low in October.  Bottom line, though, when mortgage rates reached such extremely low levels, it left them in a position to reverse direction very quickly, and that is what has happened in November.  December and January should be very interesting...

               

Understanding Appraisals    

If it’s too high, underwriters get nervous and get out their red pen.  If it’s too low, realtors get nervous and call their loan officer.  If it's right around the sales price, everyone's happy!  What is it?  The appraisal, of course!  An appraisal is a key component of the mortgage process.  It provides assurance to the lender that if the loan isn’t paid back, the lender could recoup any losses through the sale of the property.  Here are some key facts regarding this important piece of the loan approval process.

Appraisers are independent experts
Appraisers are beholden to no one.  They are independent third-parties hired by lenders to render an opinion on what a home is worth, based on specific data.  Recent guidelines put into place by Freddie Mac and Fannie Mae prohibit anyone tied to the sales side of the mortgage process (loan officer, processor, etc) discussing the appraised valued with the appraiser.  Appraiser independence is a big deal in the mortgage world today and has forced many lenders to use impersonal national appraisal firms that are low on customer service.  At Fairfield Mortgage, however, we only use the best appraisers in Georgia that have been cherry-picked by county and are the very best in each given area.

Appraisers use data and experience
Appraisals are based on opinion, but that opinion is steeped in data that supports the conclusion.  A common practice for appraisers is to compare similar properties that are superior and inferior in features, size and condition to the subject property, making adjustments between them to support the final value.  This practice, called bracketing, would work like this.  A comparable property might have a fireplace whereas the subject property does not.  Or, the square footage might be greater in the subject property compared to the other comparable properties.  Appropriate positive or negative adjustments are made to the subject property's value accounting for differences in features (or lack of them), so the properties are compared as closely as possible.

Adjustments based on market and not cost
Some home remodeling projects will deliver a healthy return on the investment, but others do not.  A seller may have paid $30,000 to install a pool, but the current market is only willing to increase the price they’ll pay for that pool by $15,000.  Adjustments are based on what the market values the improvements, not the cost or opinion of the seller.

Appraisals are a snapshot.
As market conditions change, so will the appraised value of a home.  Appraisals capture the value at a specific point in time, but as we know, the housing market can change quickly.  Thus, the value of a home in the Fall of 2010 might be a lot different than the value of the same home in the Fall of 2009.  This is why appraisers are instructed to primarily look back only 3-6 months for data and appraisals are normally only good for four months.

The appraisal piece of the mortgage puzzle, is more complicated and controversial today than ever before.  That is why it is critical to work only with lenders that use an in-house appraisal desk and the very best in appraisers.  At Fairfield Mortgage, our appraisers always involve the realtors involved in the transaction before turning in a low appraisal.  They will always ask for more data because they want to turn in a value that works if at all possible.  Like everyone at Fairfield Mortgage, they are looking for ways to make deals work, not the opposite.  Experience the difference.  Experience Fairfield Mortgage!

Rate Update


Rates are up a bit in November but there is no doubt that we can all be thankful for the low rates of 2010, which continue to be at amazing levels!

 

 

 

Conforming

Non-Conforming

FHA

VA

Loan Amount

< $417,000

> $417,000

< $346,250

< $1,000,000

30 Year Fixed

4.375%

5.375%

4.375%

4.375%

15 Year Fixed

3.750%

 4.750%

4.000%

4.000%

10 Year ARM

 

 5.125%

   

5 Year ARM

3.250%

 3.500%

   

3 Year ARM

 

 3.375%

   




The above rates are for purchase loans for a primary residence and are intended to give you an overall idea of how rates are changing from week to week. Other factors such as credit score, down payment, and number of days the rate is locked all contribute to the exact rate, which is subject to change at any time and without notification. The Conforming rates above apply to purchase loan sizes $150,000 - $417,000 and carry zero discount points. Rates for lower loan amounts are slightly higher. Lower rates are also available for all programs with discount points.  Qualification is subject to credit and property approval and other restrictions may apply.




Looking Ahead

Due to the Thanksgiving holiday, all of this week's economic reports are due out prior to Thursday.  Revisions to third quarter GDP and Existing Home Sales will be released today.  Durable Orders, New Home Sales, Personal Income, Consumer Sentiment, and the Fed Minutes from the November 3 meeting will come out on Wednesday.  The mortgage markets will be closed on Thursday and will close early on Friday.








Have a great week and when you think of financing, please think of Fairfield!

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Stuffed Dates Appetizer

by Leslie Edwards

This recipe is new to most guests and a guaranteed crowd pleaser. With only three ingredients it is quick to make once you get  the hang of stuffing dates.

Cheese Stuffed Dates with Bacon

 

Pitted Dates

Cheese Options for stuffing: Blue Cheeses, Gorgonzola, Ricotta, Goat, Feta, Mozzarella…..

Bacon, each strip cut into three strips for wrapping the dates

 

Stuff the dates with the cheese

Wrap each date in a thin strip of bacon

Secure with a toothpick

Bake at 375 degrees until bacon is cooked, turning once

 

 

 

 

Will Anything Really Change In Washington?

by Leslie Edwards

When I heard that John Boehner invited the freshman congressmen to a meeting, I knew it would not be a welcome to DC, meet and greet. Many of the newcomers were not supported by the Republican Party and some Republicans still believe that if the Tea Party had stayed out of it, they would have won a few more seats.  Although I am sure that Boehner congratulated them on their victories, the real purpose of the meeting was to explain that regardless of what they ran on, this is how it really works if you want to get anything done in Washington.  And, of course, to shore up votes for the leadership posts which were predetermined by which old white guy's turn it is to lead.

We can hope that the freshmen will continue to stand up for the policies that got them elected, but it is hard to fight a decades in power political machine.  For anything different to happen in Washington, the old white guys have to be open to new ways of doing things.  The special interests have to stop buying votes and the congressmen have to stop allowing themselves to be bought.

Each bill should be about one thing instead of adding pages of pork spending to get others to vote for the bill.  The same pork projects should be handled by the appropriations committee and not be attached to a bill that is totally unrelated. When these projects have to stand on their own, a huge number would be rejected.

The Congress should be subject to all of the same laws they make for the Country.  If they cannot exempt themselves from certain programs and laws, they might actually read the bills.  If they read them before they vote, the outcomes would be different.

The Republicans have a terrific opportunity to cement their power for years to come, if they give Americans what they think they were voting for.  It will be evident very soon if it is business as usual in Washington.  If it is, and nothing changes, the People will rise up and organize a third party that will make the changes America wants in their government.

The Tea Party was extremely effective in sharing the consistent message of limited government, balanced budget and free markets and Americans rallied behind their candidates.  And that was just the first round.  Now that they have had lots of practice, think about the waves the Tea Party can make in 2012.

Republicans have this great mandate to change the way things are done in DC.  If they fail to deliver, they will be held accountable and 2012 will truly be the year of great change.

leslie edwards                                                                        Environmentally Aware, Socially Conscious, Politically Active real estate agent

leslie@leslieedwards.com    www.SOuthMetroAtlantaMLS.com

 

 

How Long Will It Take To Sell My House?

by Leslie Edwards

To figure out how long it should take to sell a home, I use a formula that will calculate the absorption rate of each neighborhood. Knowing the correct absorption rate for the neighborhood will help the seller determine a realistic asking price for their home. 

The absorption rate formula is based on past sales, days on market, and the amount of houses currently for sale in the neighborhood/area. This information tells us how many months supply of inventory is presently on the market, and therefore provides us with information that indicates just how many months it may take to sell a particular home.  

A 6 month supply of inventory is telling us that it may take a full six months or more to sell the house. In addition, a 6 month supply is considered a balanced market, but anything over 6 months indicates there are too many houses and too few buyers, indicating it may take up to a year or more to sell the house.  

A seller whose house falls into the category of 6 months or more should be willing to position their house, in terms of price, condition, and incentives, in a way that will give them a distinct advantage over their competition.

 Sellers have different needs, motivations and desires which typically determines how aggressive they should be on their asking price.     In today's challenging real estate market, because sellers are in a price war and a beauty contest at the same time, it takes aggressive pricing and staging to show the home at it's best.                                                                                                                                                               If you would like to discuss the absorption rates for homes like yours, call or email me.  I want to be your real estate resource. 

 

leslie edwards                                                                                 Environmentally Aware, Socially Conscious, Politically Active, Real Estate Agent                                                                                         770.460.9448                                                                                        CDPE Certified Distressed Property Expert                                                CRS   Certified Residential Specialist                                                       Epro  Certified Internet Professional                                                           ABR   Accredited Buyer Representative                                                    GRI    Graduate of the Realtor Institute Dave Ramsey Endorsed Local Provider

Selling South Metro Atlanta including:Clayton, Fayette, Henry, Coweta, Merewether, South Fulton & Spalding Counties

All the towns and cities south of the Atlanta International Airport, including: Brooks, College Park, Fairburn, Fayetteville, Jonesboro, Locust Grove, McDonough, Newnan, Sharpsburg, Stockbridge, Palmetto, Peachtree City, Tyrone and more                                                                                           Moving Families Since 1978                                                                       Let My Experience Work For You                                                               fax:  770.460.0739 See all of the properties for sale in the Multiple Listing Service at www.SouthMetroAtlantaMLS.com                                                                                          .com                                              leslieedwards@leslie RE/MAX Around Atlanta.com/blogleslieedwardswww.

 Almost everyone knows someone who is behind on their mortgage payments and wants to avoid foreclosure to save their credit, relieve the uncertainty, and most of all, help their family.

Have them call me for Short Sale and Pre-Foreclosure Solutions and let's get started on the path to recovery.

http://www.leslieedwards.com/Blog/What-is-a-Short-Sale-and-Why-You-Might-Want-One

  

 

 

 

 

 

 

The Impact of a Foreclosure or Short Sale on One's Credit

by Leslie Edwards

The Impact of a Foreclosure or Short Sale on One's Credit

With today's real estate market driven by foreclosures and short sales, a common question today is how will a foreclosure, short sale, or loan modification affect one's credit score?  Below is some helpful information regarding each one of these areas.  To fully understand these comments, it is important to understand that currently there are no codes or mathematical algorithms that distinguish between a foreclosure, deed-in-lieu of foreclosure, or short sale.  Thus, current credit scoring models treat all three of these occurrences the same.  In addition, it is important to understand that every credit report is based on different variables and, thus, how much one's score will be impacted is impossible to gauge (i.e. someone with a fabulous long-term past credit history will be less affected than someone with a brief negative credit history).
       
Foreclosure

  • Remains on a credit report for 7 years.
  • Current Conforming guidelines require a waiting period of at least 5 years since the completion date of the foreclosure as well as a 10% down payment and at least a 680 credit score.  In addition, no 2nd home or investment property purchases are allowed nor cash-out refinances until the foreclosure has dropped off of the credit report.  
  • FHA guidelines require a waiting period of 4 years since the completion date of the foreclosure or 3 years if there have been extenuating circumstances.

       
Deed-in-lieu of Foreclosure

  • Although this is a "voluntary" foreclosure, it is reported the exact same way as a foreclosure on a credit report.
  • The Conforming guidelines are the same as for a foreclosure but require only a 4 year waiting period rather than 5.

       
Short Sale

  • Can be reported as either a charge-off, a settlement, or a type of foreclosure on the credit report (different creditors do it different ways).  
  • Thus, how much a score will be affected depends on who is doing the reporting and how they are choosing to report.  
  • Despite some reports to the contrary, there is no set answer to how much a credit score will be affected on a short sale.  It is a type of foreclosure, so it is best for one to expect the same foreclosure guidelines as above to be in effect for a short sale unless the foreclosing bank clarifies otherwise.  


Loan Modification

  • Under this arrangement, a lender simply lowers the borrower's rate and payment.  This solution does not reduce the principal balance nor is the lender forgiving any of the debt.  A loan modification is simply a method to avoid foreclosure and it is not considered as serious as the other methods above.
  • On the credit report, a loan modification is reported as a "Partial Payment Plan."
  • Credit scores will decrease with a loan modification but how much will depend on the other factors showing on the credit report.

                 
The bottom line is that clearly one's credit score will be adversely affected by any of the above occurrences, however, the exact amount of impact remains quite a mystery.

Save your credit, relieve the uncertainty, and most of all, help your family.

Call me for Short Sale and Pre-Foreclosure Solutions and let's get started on the path to recovery.

http://www.leslieedwards.com/Blog/What-is-a-Short-Sale-and-Why-You-Might-Want-One

leslie edwards                                                                           Environmentally Aware, Socially Conscious, Politically Active Real Estate Agent                                                                                        770.460.9448 

www.SouthMetroAtlantaMLS.com                               www.leslieedwards.com/blog                                           leslie@leslieedwards.com

RE/MAX Around Atlanta

 

Alternative to Airport Body Scanners

by Leslie Edwards

A great alternative to body scanners at airports . . .
  
The Israelis are developing an airport security device that eliminates the privacy concerns that come with full-body scanners at the airports.

It's a booth you can step into that will not X-ray you, but will detonate any explosive device you may have on you. They see this as a win-win for everyone, with none of this crap about racial profiling. It also would eliminate the costs of a long and expensive trial.  Justice would be swift. Case closed!

You're in the airport terminal and you hear a muffled explosion. Shortly thereafter an announcement comes over the PA system . . . "Attention standby passengers we now have a seat available on flight number 1234. Shalom!"

Home Prices Continue to Fall

by Leslie Edwards

WASHINGTON (AP) -- Home prices are falling further, suggesting a bottom hasn't been reached in many metro areas.

Millions of foreclosures are expected to pour onto the market in the coming years. That's likely to force prices down and hurt even cities that had begun to rebound. Investigations into banks' foreclosure paperwork could further deter buyers and weigh down prices.

The past few months have been the worst time in a decade for the housing market. Few people have bought homes, and among the small pool of buyers, many have purchased foreclosures and other distressed properties.

The impact was apparent Tuesday when Standard & Poor's/Case-Shiller released its latest index for home prices in 20 major U.S metro areas. The average price for all markets fell 0.2 percent in August and 15 cities posted declines.

But the foreclosure problem is far from over. A "shadow inventory" of homes on the verge of foreclosure is bound to force prices lower well into next year. About 2 million loans are in foreclosure, and another 2.4 million borrowers have missed at least 90 days of mortgage payments, according to LPS Applied Analytics.

"It's like a never-ending supply" of homes, said Daniel Alpert, managing partner at the New York investment bank Westwood Capital. He expects prices to fall another 10 percent over the next year -- and not improve much after that.

Most troubled homeowners are concentrated in cities that have already been battered by the housing bust. One in 15 homeowners in Las Vegas received a foreclosure notice in the first half of the year, according to foreclosure listing service RealtyTrac Inc. In the Fort Myers, Fla. metro area, the ratio was one in 20; in the Phoenix metro area it was one in 23.

"If you're going down the hill, you tend to keep going down the hill," said Mark Fleming, chief economist at real estate data firm CoreLogic.

In Las Vegas, prices have fallen 57 percent from the peak four years ago. They are now at the lowest point since spring 2000. In August, they ticked up slightly -- 0.1 percent -- according to the Case-Shiller report.

Investors buying properties to sell or lease have helped to stabilize the nation's worst housing market. Demand is also coming from retirees, said Paul Bell, a real estate agent with Prudential Americana Group in Las Vegas, who noted that 45 percent of the city's buyers are paying cash

That's "helping to contribute to a floor" in the city's home prices, Bell said.

Some markets are doing relatively well. Chicago, Washington and New York have been showing consistent price increases since spring, though the pace of those increases faded over the summer. In the nation's capital, the large number of federal employees and government contract workers have kept the economy strong. New York has seen fewer foreclosures than other cities.

California may offer the most complex housing picture. Even though the state's major cities have started to show weakness, prices are well above the bottom of spring 2009.

The San Francisco area's home prices have surged more than 21 percent since then. Prices in San Diego have risen nearly 14 percent and had increased for 15 consecutive months before falling in August.

In Los Angeles they have increased by more than 10 percent in that period. Home prices would have to rise by more than 50 percent in each of the markets to return to their peaks during the housing boom.

It's still unclear how the allegations of lenders using flawed documents to foreclosure on homes will affect housing markets. Bank of America and Ally Financial Inc.'s GMAC Mortgage have started processing foreclosures again, after calling a temporary halt while they reviewed mortgage documents.

Some buyers are worried that the sale of a foreclosure could be contested -- or even canceled -- if the previous owner claims the foreclosure was invalid.

Displaying blog entries 1-7 of 7

If you hear of anyone who wants to buy or sell in any of these areas, please mention me and then call me so I can contact them. I appreciate your referrals!