Mortgage rates on a 30-year fixed mortgage have dropped to the lowest point in over 50 years, according to mortgage giant, Freddie Mac.  Dropping to 4.58% this week, a level not seen since the 1950's! 

After the expiration of the FED program that was pumping $1.25 billion into mortgage backed securities last spring, many economists feared the rates would begin to climb. However the European debt crisis forced investors to shift their funds into "safer" US Treasury bonds, and as long-term treasury bonds are so closely tied in with the mortgage rates, the rates have continued to hover at or around 5%.

Although the rates have dropped to such a record level, tighter lending standards are making it tough for homeowners to refinance, and those that do qualify have already taken advantage of the low rates.

Freddie Mac collects mortgage rates weekly, Monday through Wednesday and as the rates are closely tied in with long-term treasury bonds, the rates can fluctuate significantly, even on a given day.

 

The National Association of Realtors (NAR) has claimed that nearly 180,000 homebuyers that purchased homes under the Homebuyer Tax Credit will not receive their tax credit if congress does not pass an extension by today.

New home construction as well as building permit applications declined in May, according to the Commerce Department. Many economists believe that the reason for the fall is the expiration of the Government programs which have been fueling the real estate market, in the spring.

According to James Marple, Senior US Economist, "Sales will almost certainly fall in the months ahead and take some steam out of housing recovery." The struggling market affects many different industries.  The National Association of Home Builders (NAHB) claims that every new home that is built creates 3 jobs for a year, nearly $90,000 in taxes for authorities as well as income for every industry from faucet factories to appliance companies. This loss of income affects the entire economy of the country.

Harry Reid, Senate Majority Leader, announced his intensions to extend the Homebuyers Tax Credit by three months, in order to allow homebuyers that might not meet the closing deadline of June 30th, some extra time.

The Homebuyer Tax Credit, a government run program that offered up to $8,000 in tax credit funds to qualified first time homebuyers as well as up to $6,500 for qualified homeowners looking to purchase another home, expired during the spring.  A stipulation in the program stated that contracts must be signed by April 30th of this year and purchases must be complete by June 30th.  According to the National Association of Realtors (NAR), an estimated 100,000 homebuyers are not expected to meet the June 30th deadline.

Rates on a 30 year fixed rate mortgage dropped to 4.72% this week to the lowest level of 2010, according to mortgage giant, Freddie Mac.  Freddie Mac collects rates from lenders across the nation Monday through Wednesday, as rates are closely tied in with long-term treasury bonds they can fluctuate significantly, even on a given day.

Buying a Summer Home

Wintering away isn’t the only option for home buyers – there’s also the possibility of buying a summer home. Maybe you’d like an isolated cabin where you can have your run of the woods, or a house nestled in the mountains. No matter the location, there are some fantastic advantages to owning a summer home. There are also some drawbacks. So before jumping into that sale, let’s look at both sides of the equation.

Pros:

If you’re buying a summer home partially as an investment, you’re in luck. Sales of vacation homes have been going up because they target specific lifestyles. Very few buyers looking for these properties want to rent them; they want to USE them. Better still, the soft real estate market means you can get your dream house for less, knowing that value is likely to improve as the market recoups.

Another advantage to looking for a summer home is variety. There are a lot of locations and housing options available to you, in fact there might be TOO many. You will need to narrow your choices by weather preferences and overall “culture” of the community in which you want to live.

The third advantage to buying a summer home is you will always know what kind of lodging awaits you for your vacation. There’ll be no surprises like noisy tourists in the next room of a hotel, or poorly cleaned accommodations.

Considerations:

While all that sounds good, a key question to ask yourself is this: Is a vacation home right for me? You may not like going to the same place year, after year, after year. Buying a summer home ties you to a location and framework. As a result, you may want to consider renting before you buy. Set up the same rental location for several years and see how you like it. If it works – then you’re probably ready to start shopping. If it doesn’t you know you’re in the wrong location or that a summer home isn’t quite your gig.

Share the Wealth?

Some buyers go in on the costs of summer homes together – not simply for the financial benefits but also to help maintain the property. Obviously you want to trust your partners and know they’re dependable. However, there is always the chance that something could go awry in the future with a partner (loss of job, for example). Now there’s the problem of all that overhead and no financial assistance. This risk might be worth it on a spectacular retreat, but otherwise it’s often smarter to go small, affordable and solo!

Renting your Vacation Home:

The frugal home owner may think heavily about renting their vacation home when they’re away. This certainly offsets mortgage costs, but it also can be a very iffy proposition. The laws about rentals and owner occupancy vary from region to region. It’s important to check them and any mortgage stipulations on the home as well. Then of course there’s the issue of having completely unknown people using your property. You’ll want a good rental contract, and may also want to consider finding a rental property manager to make sure your investment is fully protected. Proceed with caution.

Summary:

The timing is great for buying a summer home, but even so take your time. Really think about this decision before jumping into another debt. Remember to research potential locations carefully, get those home inspections, and be certain that your planned vacation home will be the dream spot you’ve always wanted.

Housing starts jumped 5.8% nationally in April 2010, the month that the Homebuyers Tax Credit expired, according to the U.S. Commerce Department.

According to Bob Jones, the Chairman of the National Association of Home Builders (NAHB), "While some of the starts activity noted in today's report reflected homes for which buyers had just signed a contract at the tail-end of the tax credit program, the rest was probably tied to builders replenishing their inventories in preparation for the post-tax credit era."

Single-family housing starts hit the highest rate since August of 2008, jumping 10.2%, while multi-family starts showed a decline of 18.6%. Through all the good news for single-family housing starts, building permits declined 11.5% in April.

David Crowe, Chief Economist at NAHB stated, "The drop-off in building permits in April indicates that builders are working down the inventory of permits pulled in the previous month and taking care not to get ahead of the market."
 

Rates on a 30 year fixed rate mortgage has dropped drastically, according to mortgage giant Freddie Mac. Coming in at an even 5%, these rates are lowest the market has seen since the end of March this year. 

Many economists feared the worst when the FED program that pumped $1.25 billion into mortgage backed securities in an attempt to keep mortgage rates at or around 5% expired at the end of April, however to date this has not been a problem, rates continued to remain around 5%.

Freddie Mac collects mortgage rates from lenders around the nation on Monday through Wednesday, as they are closely tied to long term treasury bonds, rates can fluctuate significantly even on a given day. 

Rates do include add-on fees or points. One point is equal to 1% of the total amount of the loan.

Fannie Mae and Freddie Mac purchase mortgages from lenders and then turn around and sell them to investors with a "guarantee against default".  Although, the government purchased Fannie Mae and sibling company Freddie Mac in 2008, keeping Fannie Mae in business has cost them $126 billion to date.  

Fannie Mae is now tightening the lending standards for adjustable rate mortgages as well as interest only loans by requiring lenders to calculate how high a borrower's mortgage payment could rise after the "teaser" rates expire.  Teaser rates are a temporary low rate introduced to a borrower on an adjustable rate mortgage or a credit card.  Interest only loans will now require borrowers to have a down payment of at least 30% AND enough assets for two months of living expenses.

As interest only loans and adjustable rate mortgages are the types of loans that aided in the real estate crisis, it is crucial to Fannie Mae that history does not repeat itself.  According to Marianne Sullivan, Senior VP of Single Family Credit Policy and Risk Management at Fannie Mae,  "Our goal is to make sure consumers can sustain their mortgages and remain in their homes over the long term."
 

When purchasing a new home, the sales price of the home appears to be the number that sticks out in most people’s mind, however that number can lead to a false impression of what it will cost to purchase a new home. There are many other fees that can be hidden or plain just not thought of when purchasing your new home.  

Once you have come to the decision that you want to own a home and no longer rent, the first thing to consider would be your credit.  It's important to clean up all your credit before hand in order to have a better credit score; this will give you a better chance at a lower interest rate.  Today's mortgage rates have been hovering at or around 5% thanks to the FED program, that has pumped $1.25 billion into mortgage backed securities.  Although this program expired at the end of March, the rates have not fluctuated by all that much. Be sure to add the price of cleaning up your credit to the cost of the home.

Closing costs should also be taken into consideration, as they will be needed up front in addition to your down payment.  The closing costs on a loan are to cover items such as title searches, administrative expenses etc.  According to Greg Herb, regional vice president for the National Association of Realtors (NAR), these costs could be equal to around 4 to 6 percent of the homes' sale price. Therefore if you are looking at home for 100,000, closing costs could be somewhere in the neighborhood of $6,000.  

Real estate attorneys are not necessary when purchasing a home, but they can help in giving the buyer piece of mind knowing that all necessary paperwork is complete to the letter of the law.  This could be another cost to be considered.  Costs of hiring a real estate attorney can vary.

Then of course there is the cost of moving into your new home.  If you are purchasing a home that is considerably larger than the home that you already live in could create the need for more furniture, window treatments, pictures and nick knacks. The costs of these items could easily run into the thousands.  You would also need to consider the cost of renting a moving van, movers and if you are moving long distances; the gas for the move.  Turning on your utilities at your new home will usually require a deposit, be sure to include that into your moving costs, as well!
 

Home sales are rising and unemployment benefit claims are dropping; sounds like a recipe for economic recovery!

After three consecutive months of declining numbers on the sales of previously occupied homes, March of 2010 saw a significant rise in sales, according to the National Association of Realtors (NAR).

Economists believe the unexpected rise in sales was due to the expiration of the FED program that was keeping mortgage rates at or around 5% and the Homebuyer’s Tax Credit. 

With the spring season, comes the real estate season, and many analysts believe that it will be the busiest season that we have seen in some time, according to Stuart Hoffman, the chief economist at PNC Financial Services Group.

After weeks of steep inclines in the amount of claims for unemployment, the Labor Department stated that claims have fallen by 24,000. In addition, the amount of people that are continuing to claim unemployment benefits has declined by 40,000.

So there ya have it, two positive reports regarding the economy.  After hearing all the negative, hearing a little positive is a nice change.

Today is Earth Day and its time to celebrate .  Using Earth friendly items around your home increases the selling opportunity and also helps with environmental issues.  Lets start with solar power.  Solar power is now becoming more affordable nationally across the board.  You can now get solar panels that will heat your pool, preheat your water going into the water heater, and to power your home off the electrical grid.  In some areas you can actually sell the excess power generated by solar panels back to the power company, thereby helping pay for the initial cost.

Another good Earth Day item is water collection.  In most places in the US, droughts have effected how you use water, for showers, washing cars, drinking  and watering the lawn and plants.  I recommend buying 55 gallon drums that are designed for collecting rainwater and to use that water for your plants and shrubs.  If you look around, you will find containers similar to 55 gallon drums but smaller and designed to be pleasing to the eyes.

When you get into your new home, or getting ready to sell your home, think about installing low water usage toilets and shower head restricters.  That helps conserve water as well.  An instant heat water heater also saves energy by heating water extremely fast as needed, instead of the typical water heater that uses a thermostat.

So Happy Earth Day!  Lets do what we can to help save our earth.  Its the only one we have!

Lawn maintainence while a property is up for sale is one of those things that everybody hates, no one knows who is supposed to do it, and is an all round pain in the butt.  One of the things I would do is hire a reputable lawn care company.  Fertilize the yard and kill the weeds.  If the homeowner will do this thats the best option but if you are property management you might get stuck doing it, so choose well.  Most banks and lenders wont do anything on a foreclosure unless forced to by codes or regulation enforcement.

Get a specialist in trees to do the trimming.  You dont want to kill that beautiful oak tree, do you?  An arborist is also a good choice for buyers to have the trees on the property inspected for disease and permenant damage.  Every little thing can make a buyer buy so it behooves you and your commission check to keep an eye out for possible problems.

I know that I cannot stand to go past a yard with a for sale sign on it and notice how shabby it looks.  If its in MY neighboorhood it can actually LOWER my property value.  Make a run around the block and get code enforcement out there if you see a home thats not up to snuff.  Every homeowner has to follow certain city, county, or state codes concerning property so do this and make the sale!!!!!!

The Obama Administration program, aimed at providing modifications to second mortgages, is starting to make progress.  The program, known as 2MP, offers incentives such as extending the term of loan to 40 years and lowering monthly payments, to qualified lenders, borrowers and investors alike that hold a second mortgage.

The program is expected to aid nearly 1.5 million struggling qualified homeowners as long as the loan originated on or before January 1, 2009.  

Nearly 1/2 of the second liens in the nation are held by Bank of America, Citi Mortgage, Inc., Chase and Wells Fargo, all who have all joined the program.

The number of homeowners to receive assistance is limited; check the Making Home Affordable website to see if you are eligible for assistance.





 

The commercial real estate market was hit pretty hard during the economic crisis, however recently property prices are seeing a slight incline when compared to the fall of 2009.  Foreclosures still remain an issue in the commercial real estate market, yet according to Richard Parkus, Deutsche Bank analyst, nearly $13.7 billion in loans have been modified in the last six months.

Commercial real estate values have also inched up 6%, according to Real Capital Analytics, after falling 45% between the years 2007 and 2009.  As the property values have hit bottom and lending standards have toughened up, the doors have re-opened for investors once more.

Even as the commercial real estate market continues to be somewhat challenging, the recent reports show that there are some positive signs that the market could very well be perking up!
 

Many analysts are concerned for the housing market after the federal tax credit expires at the end of this month, but have no fear; more incentives are coming!  

As existing home sales are on the rise, new home starts are starting to move again, however they are moving slowly.  Builders are likely to be the next group to offer free options, upgrades and incentives, in order to get the new home sales market back into the game!  In December of 2008, builders were offering all sorts of giveaways in an effort to get business in an industry that was slowly dwindling, it is unlikely that incentives offered will be as extreme as they were then, but they will be available.

According to Steve Melman, the director of economic services at the National Association of Home Builders (NAHB), "Incentives don't disappear, even in the best of times." he stated, "Even in the good times, builders will throw things in."
 

The Obama Administration devised a foreclosure prevention program, Home Affordable Modification Program (HAMP) that enabled troubled homeowners to reduce their mortgage payments to 31% of their pre-tax income.  After following the guidelines during the homeowner’s trial modification of their mortgage, homeowners are then re-evaluated to qualify for a permanent modification.

To date, 228,000 troubled borrowers have received a permanent loan modification through the HAMP program, 781,000 troubled borrowers have been placed in the trial modification part of the program. The original goal of HAMP was to aid 4 million homeowners, the program has fallen short of its mark however the amount of people who have benefited from HAMP is still increasing.

One issue inhibiting the program is the passing of paperwork between the lenders and the borrowers and the inability to keep track of it.  Lenders are complaining that borrowers are not turning in the required paperwork while borrowers are claiming the lenders are losing paperwork. Resolution of this problem will begin in June, borrowers must have all required documentation needed and given to the lender before a trial modification will be considered.

To see if you qualify for a loan modification under the HAMP qualifications click here.


 

Fannie Mae made an announcement last week offering a six-month relief on mortgage payments to homeowners suffering with Chinese Drywall, in addition, the relief will not be recorded to the credit bureaus.  In response to the announcement, three US Senators have requested that the same relief be extended to the homeowners in Florida and Louisiana.

Chinese Drywall was purchased between 2005 and 2007 during a time when construction was at it's peak.  Between the housing boom and the multiple hurricanes devastating the area, building supplies were difficult to come by, therefore, many builders began importing supplies from international sources.  Drywall purchased from China has higher amounts of strontium than what is found in US drywall.  These high levels of strontium are accused of having created a sulfur-like smell that permeates throughout the home as well as corroding electrical wirings and in some cases, respiratory issues in homeowners.  

Homeowners affected by Chinese Drywall, have been left in limbo, unable to make mortgage payments while paying rent, as the affected homes are not able to be lived in. They have been unable to receive aid from insurance companies, Florida Emergency Management Agency (FEMA) and most builders.  

The beginning of this month, there was big news however, when Federal Judge, Eldon Fallon awarded 7 families, affected by Chinese Drywall, from Virginia $2.6 million in damages. These steps from Fannie Mae, Freddie Mac and Federal Jude Eldon Fallon, may be small steps, but they are steps in the right direction!
 

The time is drawing near for the expiration of the Home Buyer Tax Credit!  In an effort to stimulate the national housing market, Congress extended and amended the First Time Homebuyers Tax Credit from November of 2009 until the end of April of 2010 and to also include current homeowners looking to purchase a second home.  The tax credit enables qualified homeowners to receive a credit of up to $6,500 when purchasing a second home or for qualified potential homebuyers to receive a credit of up to $8,000 upon purchasing their first home.

In order to qualify for the tax credit you must have a binding contract by April 30, 2010 and a closing date no later than June 30, 2010.  For more information on the tax credit feel free to visit the National Association of Realtors (NAR) website or contact the Internal Revenue Service (IRS) at 1-800-829-1040.

Time is running short, don't miss out!  



 

Housing starts across the nation rose 1.6% in March, according to the Commerce Department; these stats mark a rise to the highest level seen since November of 2008.  Analysts believed the starts would rise to approximately 610,000 units; the actual 626,000 units were unexpected.

The Commerce Department also showed that new building permits rose 7.5% which is the highest seen since October of 2008.  New building permits give a feel for what the new home construction has in store in the future.  According to Cary Leahey, Decision Economics economist, "Some of the worries about the housing market have been alleviated by this report."
 

The National Flood Insurance Program (NFIP) has been extended through May of this year!  The program, which expired on March 28th of this year leaving many homeowners and potential homebuyers in limbo, was part of a larger bill that included an extension of COBRA health benefits and unemployment was signed by Obama Thursday.

The vote in the Senate approved this $18 billion bill 59-38, despite the Republican opposition.  Only three of the Senate Republicans joined the Democrats in approving the extension, claiming the bill was not paid for and should have "corresponding spending cuts elsewhere". 

According to the officials of the Independent Insurance Agents and Brokers of America, “In theory, the NFIP will now return to normal operations and, since the extension is also retroactive, any new policy applications or renewals that were signed and submitted during the hiatus will be effective from the date of application."

Unfortunately, with the rising number of foreclosures, come a rising number of vacant homes.  These vacant homes have become bait to scam artists looking for a quick buck!  Scam artists posing as landlords are luring prospective renters in and taking their cash deposits never to be heard from again.  

According to Adam Christianson, Sheriff of Shanisulous County in California, “What you have is primarily young, unsuspecting victims who truly believe they’re entering into a legitimate rental agreement, before you know it, the real property manager shows up and says ‘Why are you here?’ Then they’re out on the street, and also out the money for first and last month’s rent and deposit.”

As a renter, it is important to protect yourself.  Take some time to gather some background information on your new rental, find out who owns the home.  If the name of the person renting the home to you does not match the name of the person who owns the home, contact the owner and inform them of the circumstances that are taking place.  Pay for your deposit with a check, this will deter landlord  impersonators as they will have to show ID to cash a check or deposit it into their account leaving a paper trail that leads back to them.  Educating yourself and being aware of scams is the best protection that you can have.
 

According to the Standard & Poor's/Case-Shiller home price index, home prices showed the smallest decline in almost three years, in an annual comparison.  The index was released on Tuesday, March 30, 1020, showing a reading of 146.32, although this shows a rise of nearly 4% since May of last year, the numbers are still down nearly 30% from May of 2006.

Many economists believe that once the government incentives, that have helped aid in keeping the market afloat expire, that home prices will begin to drop once again.  Today was the last day of the government program that has been pumping $1.25 billion into mortgage backed securities, in an effort to keep mortgage rates around 5% and the Homebuyers Tax Credit will expire at the end of next month. The market will not be tested again until the second half of the year, long after these two government incentives expire.    
 

Annually, Florida Realtors and Key Contacts who wish to make their voice heard to the legislators gather together for legislative briefings, meetings with your Legislators and parties!   

This event will be held in Tallahassee, Leon County, Florida at the Challenger Learning Center, only minutes away from the offices of the Florida Realtors and the Capitol.

Four Legislative Briefings will be held inside the IMAX Theater, two of which will be live and two that will be recorded, allowing you to set your schedule accordingly.

For more information please visit the Florida Realtors website or contact Suzanne Hughes in the Tallahassee office of Public Policy at 850-224-1400.