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Arden Heights, Staten Island - We invite everyone to visit our open house at 101 Hampton Green on August 8 from 1:00 PM to 3:00 PM.
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Graniteville, Staten Island - We invite everyone to visit our open house at 93 SELVIN LOOP on August 1 from 1:00 PM to 3:00 PM.
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Homeownership almost seems like a dirty word in today’s society. People are blogging, tweeting and facebooking their belief that buying a home is just plain stupid. I respect their opinion on the issue though I totally disagree. Why?
This might be the best time to buy a home in American real estate history.
Some might think I’m crazy. Cynics might think that I am saying this because I still hold a real estate license (though I have not listed nor sold a home in ten years). My reason for saying it is actually quite simple. Owning a home makes more sense than not owning a home for the vast majority of families in this country. Let me give you five reasons why.
1. Real Estate is a Great Long Term Investment
Don’t take my word on this. This is what Mike Mandel, former chief economist at BusinessWeek and current Senior Fellow at Wharton’s Mack Center for Technological Innovation, had to say:
We’ve just had the biggest boom and bust in real history in recent history. Nevertheless, real estate has still greatly outperformed the stock market over the past ten years.
Below is his chart actually showing the difference between real estate and the stock market.
2. A Home Is a Better Place to Raise a Family
Don’t take my word on this. When Fannie Mae asked current renters for the major reason to buy a house in their National Housing Survey 2010, these were the answers renters gave (they could pick multiple answers):
- 78% said it was a good place to raise children
- 75% said because they would feel safe
- 70% said because you have control of your own space
3. A Home Creates a Sense of Community
Don’t take my word on this. The Federal Reserve Bank of New York just published a paper The Homeownership Gap. The paper explained:
Because owners have a financial interest in their property, they have incentives to take measures that will maintain or increase the value of that property. Some of these measures—such as fixing a leaky roof—are closely related to the house itself. Others, such as investing resources in the betterment of the neighborhood and the community, have broader beneficial effects on the local area, creating what economists call “positive externalities.”
4. It’s Cheaper to Own Than Rent in Many Parts of the Country
Don’t take my word on this. Housing Wire just reported on a Credit Suisse study:
While a segment of the renting population continues to rent, many are looking to dip their toes in the homeownership waters. Credit Suisse said the percentage of median household income needed to pay the mortgage on a median priced home is at a 30-year low… Low mortgage rates and property values makes homeownership more attractive than renting for many. In many markets — including Washington DC, California’s Inland Empire, Las Vegas and Phoenix — paying for a mortgage is less expensive than renting.
And here is a graph from the study:
5. The People Who Do Buy a Home Don’t Regret It
Don’t take my word on this. Probably the best people to ask if buying a home makes sense are the people who currently own homes. A recent national poll commissioned by Bankrate.com found:
Ninety percent of homeowners say they don’t regret buying their home despite a nationwide tsunami of foreclosures, short sales and loan modifications.
It’s a great long term investment. It’s a great place to raise a family. It gives you a greater sense of community. It’s less expensive than renting. People who currently own have no regrets. Buying a home seems like a no brainer to me.
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Arden Heights, Staten Island - We invite everyone to visit our open house at 101 Hampton Green on July 18 from 1:00 PM to 3:00 PM. 
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Most homeowners enjoy the every project that they have made in their home. They like to add, improve and make changes all over the house for them to live comfortable and pretty satisfied of what they are seeing around. But it isn’t all about that because everything that we do in our home can add to its real estate property value. And when the time comes that you’ll be decided to sell your home you will gain get more money out of these projects that you’ve done. Here are some of the projects that will help to appraise your home value.
Basement Improvements – This is one of the most important remodeling works that you can do in your home. You can improve your basement by finishing, adding flooring, insulation, drywall and lighting. Furthermore, you can transform this into a usable place in a way of adding a living space. A living space will cost you less than adding a whole new room.
Gutters improvement and repairs – If you want your home to be more appealing in its outside looks, gutters should be the first exterior features that you must consider to work on. Gutters repairs and maintenance will protect the rest of the home exterior from water damage. Maintain gutters regularly by patching holes, cleaning of debris that stop water from flowing and making sure that it is always in place and secure.
A major lawn makeover – the lawn appearance effect the overall value of home that simply means irregular appearance of lawn detracts from the property overall appearance. Getting the lawn in shape is the first step in lawn total makeover , test the soil to know if what chemicals will help the grass grows healthy and reseed bad areas.
Adding fence around - fence can give you privacy, security, protection and enhance the outside look of your home. But before you start this outdoor home project of yours make sure to check the home owner’s association rules if it’s allowed. Some neighborhoods don’t allow some fencing materials, and rules on how high should be the fence.
Update bathroom fixtures and hardware – Like any other parts of the house, little changes go a long way when it comes to bathroom updates. You can make the bathroom look stylish by just simply replacing the old hardware and fixture. If you are not contented enough of how the way it looks you can replace and upgrade your sink the trendy and modern one.
Replace outdated kitchen appliances with new ones - Many real estate professionals believe that this part of the house should be focused more when it comes to renovation and upgrades. They believe that simple upgrade to this room will bring back a enormous investment in return. One way of improving your kitchen that could entirely change the overall looks is by upgrading the appliances.
There is more and more conversation regarding strategic defaults. And that only makes sense since the number of borrowers deciding to take this path is increasing exponentially.
What is a strategic default?
Let’s first define strategic default in simple terms. According to Wikipedia:
A strategic default is the decision by a borrower to stop making payments (i.e. default) on a debt despite having the financial ability to make the payments.
This is particularly associated with residential and commercial mortgages, in which case it usually occurs after a substantial drop in the house’s price such that the debt owed is (considerably) greater than the value of the property – the property negative equity or “underwater” – and is expected to remain so for the foreseeable future, such as following the bursting of a real estate bubble. Such borrowers are called “walkaways.”
This definition itself help serves as the explanation as to why people will default.
Why do people strategically default?
There is a feeling which is growing among many borrowers that once their house falls in value so that it is no longer worth the amount of the mortgage(s) on the house, it might make sense to walk away from the obligation of paying the mortgage(s).
This way of thinking has been supported by many main stream players such as a law professor at the University of Arizona, the New York Times and the Wall Street Journal which said in a blog post that:
Whether we like it or not, walking away from debts is as American as apple pie.
Who are the people who choose this method?
Many are surprised to find out that all different types of borrowers have decided to walk away from what many feel is a moral obligation to pay your debts.
In a recent study, Amherst Securities reported that all categories of loans are being impacted. Here is a graph from that study:
Here is an explanation of the graph from a Reuters’ article on the subject:
The x-axis measures combined loan to value ratios (CLTV). In other words, combine the balance of all mortgages attached to a property (e.g.: a first mortgage + a home equity loan) and compare that to the property’s value. CLTV over 100% means more is owed on the house than it is worth. Yes, there’s a higher default rate for more poorly written mortgages (lower FICOs, low/no documentation), but even those that are well-underwritten (high FICOs and verified income) show spiking strategic defaults as equity goes negative. In other words, more folks who could pay their mortgage are choosing not to.
We can see that all categories of purchasers are picking this option as they fall deeper into negative equity.
How long will this practice of walking away last?
As long as housing prices continue to fall, there will be more and more families choosing this option. We are currently trapped in a vicious cycle which will continue to force people to make a decision. Below is a simple visual depicting the issue:
What does this mean to you?
It depends on whether you are a buyer or seller or if you are in a negative equity position or not. All we know for sure is that more people are deciding to walk.
www.Mesa4Homes.com
FHA Pros, LLC, a national FHA condo approval service, has developed a list of facts speaking to the top misconceptions associated with FHA loans in order to help home buyers better navigate an already confusing market. FHA loans are mortgages issued by qualified lenders and insured by the Federal Housing Administration (FHA).
“We have seen home buyer interest in FHA loans go from practically zero three years ago to upwards of 87 percent today,” said Christopher Gardner, founder and president of FHA Pros, LLC. “Despite this rapid rise in popularity, many buyers still do not fully understand the benefits of these loans, and we believe it’s time to change that.”
1. FHA Loans Are Not Only For Lower-Income Borrowers. FHA loans are available to everyone. In fact, even Bill Gates can get one. There is no maximum income restriction associated with FHA loans. Borrowers do need to substantiate income and assets by submitting proper documentation. This requirement ensures that borrowers are well-vetted and truly able to afford their future homes.
2. FHA Loans Are Not Only For First-Time Buyers. Many people believe FHA loans are available only to first-time homebuyers. This is not the case. Whether borrowers are making their first home purchase or their fifth, they can look to FHA loans as a home financing option.
3. FHA Loans Are Not Just Small Loans; In Fact, Loan Amounts Can Be As High As Almost $800,000. The government recently raised the maximum loan amount from its original cap of $362,790 to $793,750 as a way to help stabilize the housing market. The amount a buyer can borrow varies from county to county. Later this summer, condo buyers interested in FHA loans can visit www.checkfhaapproval.com to instantly identify FHA-approved condo associations and review maximum loan amounts for a given location.
4. FHA Loans Are Not Affiliated With The Section 8 Housing Program. While both programs are administered by the U.S. Department of Housing and Urban Development (HUD), FHA loans have nothing to do with low-income subsidized housing. FHA loans are simply mortgages insured by FHA. This insurance provided by the federal government allows lenders to lend more freely by assuring them that they will be repaid in the event of default. Most traditional lenders, including Wells Fargo & Co., JP Morgan Chase and Citigroup are able to provide FHA loans to their customers.
5. FHA Loans Are Often More Affordable Than Conventional Loans. While FHA loans typically offer the same interest rates as other loans, borrowers benefit from a much lower down payment of as low as 3.5 percent.
6. FHA-Approved Condo Developments Are More Desirable To Buyers. With 87 percent of home buyers indicating that they plan to use FHA loans, condo associations that are not FHA approved are missing out on a significant pool of prospective buyers. Under rules in place since February 2010, an entire condominium development must now apply to HUD and be granted FHA approval before a buyer can purchase a unit in an association with an FHA loan or before an existing unit owner can refinance into an FHA loan.
Due to the general unwillingness of today’s lenders to extend credit with respect to conventional loans, many borrowers find that FHA is their best bet. Lenders don’t mind lending when the federal government (FHA) assures them of repayment.
Homeowners associations (HOAs) should note that although FHA-insured mortgages might be easier to obtain, they are not “risky” loans, due in large part to the strict “full documentation” requirements placed on borrowers.
Individual buyers or sellers can initiate the approval process or current owners can encourage their HOA to apply. More information about the FHA- approval process is available at www.getfhaapproval.com.
7. FHA Loans Are Assumable. In addition to lower down-payment and credit-qualifying requirements as compared to conventional loans, FHA loans are assumable. This means that when a seller with an FHA loan sells his or her property, the loan and its financing terms (interest rate) can be transferred to the new buyer. This unique feature will certainly make a property more valuable in times of rising interest rates.
“Now, more than ever, buyers and sellers need to understand the options available to them when it comes time to buy a home,” continued Gardner. “At FHA Pros we have worked with countless HOAs, attorneys and individuals to easily and efficiently navigate the historically tricky FHA-approval process.”
New York Times report:
Congress has sent President Obama a plan to give home buyers an extra three months to qualify for up to $8,000 in federal tax credits. Buyers who already have signed contracts will now have until Sept. 30 to complete their purchases. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale. The House approved the measure on Tuesday. Legislation in the Senate was approved Wednesday night by unanimous consent.
There is a growing trend in this country of people walking away from their mortgage obligations. The definition of a ‘walk away’ borrower is one who has the financial means to continue to make their mortgage payment but decides not to. This situation is also called strategic default.
The incidence of people taking this path is growing dramatically. A study done by The Chicago Booth/Kellogg School Financial Trust Index reported:
The number of homeowners willing to default when the value of a mortgage exceeds the value of their house, even if they can afford to pay their mortgage, dramatically increased compared to just a year ago. The percentage of foreclosures that were perceived to be strategic was 31 percent in March 2010, compared to 22 percent in March 2009.
In a news release announcing the report Paola Sapienza, professor of finance at the Kellogg School of Management at Northwestern University and co-author of the report said:
“With more and more homeowners believing that lenders are failing to pursue those who default on their mortgages, there is a risk that a growing number of homeowners will walk away from their homes even if they can afford monthly payments.”
Strategically defaulting on your mortgage has been supported by many main stream players such as a law professor at the University of Arizona, the New York Times and the Wall Street Journal which said in a blog post that:
Whether we like it or not, walking away from debts is as American as apple pie.
What impact does this have on the housing market?
PRICES
House prices are determined by supply and demand. The supply of distressed (discounted) properties lowers the values of all the homes in the area. These foreclosures are added to the mix of comparables used by appraisers to establish value on homes sold. If a borrower decided to short sale instead of walk away, the property would sell for approximately 86.9% of full value while a foreclosure sells for only 57.3% of full value (according to First American Core Logic’s Distressed Property Report).
Freddie Mac in a news release probably said it best:
Let’s start with the neighbors. When strategic defaults occur, homes go into foreclosure and sit vacant for some period of time. We know from experience that foreclosures and vacancies drive down the property values of everyone else in the neighborhood. Thus, strategic defaulters, in effect, deplete the personal wealth of their neighbors. Get a critical mass of strategic defaults, and broader communities and regions become affected. Indeed, Economy.com, the analytic firm, recently said that more strategic defaults could tip a fragile housing market back into one of further price declines. Even more families harmed.
As prices fall, more borrowers fall into a position of negative equity (their house is worth less than the mortgage). This is the number one reason people ‘walk away’.
This past week a Seeking Alpha article entitled Housing: Could Strategic Default Turn into a Full Blown Movement? reported:
Many homeowners are unlikely to sit idly by while their neighbors walk away from their underwater mortgages. But one thing is certain: if strategic default becomes a widespread trend then a double dip in housing prices has moved a lot closer to becoming a done deal.
LENDING GUIDELINES
Banks are trying to deal with this new phenomenon of ‘walking away’. No one could blame them if they started to price into mortgages the risk to which they are now being subjected.
Freddie Mac, in the same news release mentioned above, discusses this exact point:
Should strategic defaults become more common, mortgage guarantors and investors, including Freddie Mac, would need to factor this risk more prominently into their credit policies and prices. The likely impact on future homebuyers: the cost of a mortgage will go up and credit terms will be less flexible. Thus, the impact of strategic defaulters on still more families might be more expensive mortgages and loans that are more difficult to obtain. The strategic defaulter does not usually consider these costs.
What does this mean to you?
The value of your home is being adversely impacted by those that walk awy. The cost of your next mortgage may also be affected.
Let’s start by killing two rumors that are out there: that the extension would allow new buyers to be eligible for the credit and that the extension has already been granted.
1. The possible extension is only an extension on the closing date deadline of June 30th.
There were two different deadlines in the Tax Credit. The home had to be in contract by April 30th and closed by June 30th. There was never talk of extending the date to get the home into contract (April 30). The proposal was to allow buyers who were already in contract by the April deadline to close after the original June deadline.
2. The extension has NOT been approved.
Though it was reported by many that the extension was granted and by others that it was a ‘done deal’, it didn’t happen. The confusion started when some reported the Senate approved the extension two weeks ago. The Senate did vote to approve an amendment extending the deadline. This amendment was part of a much larger bill. The larger bill then failed to get Senate approval thus ending the approval process for any amendments (including the extension) in that bill.
Where does the extension stand today?
For any chance of an extension, Congress must reattach the amendment to another bill or make the extension a standalone bill to be voted on. The National Association of Realtors (NAR) and others are fighting diligently to get this done. Ken Trepeta, the Director of Real Estate Services for NAR, let me know on Friday:
We may still get this extension and our people and others in the Realtor family have been working on it on multiple levels (separate bill, attach to another bill, ditto for flood insurance which is also important), but time is running out. The safe bet is to close all the deals that are eligible now. Those who didn’t make it might still get the closing extension but it is increasingly unlikely that we will know that before June 30th and I am not sure when, or if, it will get done. Stay tuned!
Trepeta is referring to the fact that Congress may grant an extension after June 30th and make it retroactive to that date.
What does this mean to you?
If you are selling…
It depends on how your contract reads. Be prepared to perhaps renegotiate your deal and ‘sweeten the pie’ for a buyer who could be upset that he lost the tax credit. Do not let your ego get in the way. The most recent housing reports suggest strongly that it may not be easy to replace your current purchaser. Even if you do, there is no guarantee that you will sell at the same price or that the house will appraise.
If you are buying…
You have found a home that you believe was worth the price you paid. The bank agreed. You have made all sorts of plans for the new home. Don’t be willing to give this up easily. You could jump back into the market and perhaps find a comparable house. However, if you close this week, you will be getting one of the best mortgage interest rates in American real estate history. There is absolutely no guarantee that will happen later in the year if you push off this opportunity.
For More info Visit www.Mesa4Homes.com
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Are you thinking of selling your home? Are you dreading having to deal with strangers walking through the house? Are you concerned about getting the paperwork correct? Hiring a professional real estate agent can take away most of the challenges of selling. A great agent is always worth more than the commission they charge just like a great doctor or great accountant. You want to deal with one of the best agents in your marketplace. To do this, you must be able to distinguish the average agent from the great one. Let us help.
If I were hiring an agent to sell my home today, I would require they:
1. Tell me the truth about the price
Too many agents just take the listing at any price and then try to the ‘work the seller’ for a price correction later. Demand that the agent prove to you that they have a belief in the price they are suggesting. Make them show you their plan to sell the house at that price – TWICE! Every house in today’s market must be sold two times – first to a buyer and then to the bank.
The second sale may be more difficult than he first. The residential appraisal process has gone through a complete overhaul in the last twelve months. It has become more difficult to get the banks to agree on the contract price. A red flag should be raised if your agent is not discussing this with you at the time of the listing.
2. Understand the timetable with which my family is dealing
You will be moving your family to a new home. Whether the move revolves around the start of a new school year or the start of a new job, you will be trying to put the move to a plan. This can be very emotionally draining. Demand from your agent an appreciation for the timetables you are setting. I am not suggesting that your agent can pick the exact date for your move. You just want the agent to exert any influence they can.
3. Remove as many of the challenges as possible
We are still in a market which heavily favors the buyer. With buyer demand steady at best and inventories of homes for sale climbing, the buyer can feel that they have all the power in the negotiation. It is imperative that your agent know how to handle the challenges that will arise. An agent’s ability to negotiate is critical in this market.
Remember: If you have an agent who was weak negotiating with you on the parts of the listing contract that were most important to them (commission, length, etc.), don’t expect them to turn into Superman when they are negotiating for you with your buyer.
4. Help with the relocation
If you haven’t yet picked your new home, make sure the agent is capable and willing to help you. The coordination of the move is crucial. You don’t want to be without a roof over your head the night of the closing. Likewise, you don’t want to end up paying two housing expenses (whether it is rent or mortgage). You should, in most cases, be able to close on your current home and immediately move into your new residence.
5. Get the house SOLD!
There is a reason you are putting yourself and your family through the process of moving. You are moving on with your life in some way. The reason is important, or you wouldn’t be dealing with the headaches and challenges that come along with selling. Do not allow your agent to forget these motivations. Constantly remind them that selling the house is why you hired them. Make sure that they don’t worry about your feelings more than they worry about your family. If they discover something needs to be done to attain your goal (i.e. price correction, repair, removing clutter), insist they have the courage to inform you.
Good agents know how to deliver good news. Great agents know how to deliver tough news. In today’s market, YOU NEED A GREAT AGENT!
When you need a GREAT AGENT Call me today (718) 801-3005
Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.
Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for housing based on your financial and personal goals.
Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree? Will a new child add day care to your monthly expenses? Does a relative plan to eventually live with you and contribute to the mortgage?
Still not sure how much you can afford? You can use the same formulas that most lenders use, or try another of these traditional methods for estimating the amount of mortgage you can afford.
1. The general rule of mortgage affordability
As a rule of thumb, you can typically afford a home priced two to three times your gross income. If you earn $100,000, you can typically afford a home between $200,000 and $300,000.
To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs.
2. Factor in your downpayment
How much money do you have for a downpayment? The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home’s cost, you may not have to get private mortgage insurance, which costs hundreds each month. That leaves more money for your mortgage payment.
The lower your downpayment, the higher the loan amount you’ll need to qualify for and the higher your monthly mortgage payment.
3. Consider your overall debt
Lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn’t total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like car loans, utilities, and credit cards, shouldn’t exceed 41% of your gross annual income.
Here’s how that works. If your gross annual income is $100,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $2,333 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don’t top 41%, or $3,416 in our example.
4. Use your rent as a mortgage guide
The tax benefits of homeownership generally allow you to afford a mortgage payment—including taxes and insurance—of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.
Here’s an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.
However, if you’re struggling to keep up with your rent, consider what amount would be comfortable and use that for the calcuation instead.
Also consider whether or not you’ll itemize your deductions. If you take the standard deduction, you can’t also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a “what if” tax return, can help you see your tax situation more clearly.
For More information Visit my website www.Mesa4Homes.com
Thank God For Those Who Have Served!
We all owe a debt of gratitude to the men and women who have served this country in times of peace and times of conflict. They preserve the freedoms the rest of us too often take for granted. As a nation, there are too few times we properly say “thank you” to our veterans, but, as it relates to housing, we do stand up and offer considerable assistance. Today, I want to address two such instances.
First Time & Repeat Homebuyer Tax Credit Extension
First, did you know that the First Time Homebuyer (of up to $8000) and the Repeat Homebuyer (of up to $6500) Tax Credits are still available for Veterans who have served overseas in the last 12 months? Most people are unaware that qualified vets can still get the credit, if they get into contract by April 30, 2011 and close by June 30, 2011. That’s an additional year to keep looking for a home! A solid “Thank You” for veterans! (As an aside, some Federal Government employees who were stationed overseas also have an extended opportunity.)
The Traditional VA Mortgage
The second benefit afforded those who have served is the traditional VA Mortgage. Some of the highlights that make the VA loan an attractive one are as follows:
- 100% financing! That’s right…..100%! You can buy a home with no down payment.
- The Seller can pay your closing costs as an incentive to induce you to buy their home. That means you don’t need to come up with that money either.
- No Reserve Requirements means you don’t need to have any real savings at all to buy a home with a VA loan. (Now, that doesn’t mean you shouldn’t have money in the bank before you buy a home, but it does mean you don’t have to.)
- More liberal understanding of credit challenges from VA Underwriters make getting approved easier.
- There are circumstances where the VA Funding Fee (their version of mortgage insurance) can be waived….ask your LO.
Two of the major hurdles for homebuyers today are accumulating sufficient liquid assets and credit scoring imperfections. The VA Mortgage lowers both hurdles considerably.
At the same time, the VA protects its constituency in two main ways. First, they control and strictly review the appraisal. They are devoted to both proper valuation (making sure the veteran isn’t getting ripped off by overpaying) and the condition of the property. Second, underwriting for affordability is a little different (and more logical) on a VA loan.
When calculating ratios (the percent of your expenses compared to your income), the VA only considers a total debt ratio….while traditional mortgage underwriting has two ratios (“housing expense to income” and “total debt to income”). VA Guidelines allow loans to be approved if a borrower’s monthly debts remain below 41% of their monthly income. At times, even higher ratios are considered if there are compensating factors (like strong credit and assets).
But the uniqueness extends beyond the ratios. The VA does an additional calculation called “Residual Income”. Basically, it does a real world budget for the Veteran, taking into all their expenses (like heat and electricity, food, clothing, income taxes and so on). There are adjustments based on how many children you have because it is more expensive to feed six kids than two. While other mortgage products ignore the difference between an applicant who purchases a home in a state without state income taxes, the VA loan doesn’t ignore it. As long as a customer has $1 in “Residual Income”, the VA underwriter can approve the loan!
Talk to your loan officer about other factors in eligibility, but anyone who is qualified should consider a VA mortgage.
It is our mission on this blog to give you the factual data behind the current housing headlines. We ask Steve Harney to give his insights in an attempt to bring clarity to what (at times) seems to be conflicting information, and there are moments where we reach out to industry specialists in order to provide a more focused aim on certain real estate trends or topics. Today, we just wanted to give you five clear-cut insights from some of the top economic experts in our field that have recently shined some light on April’s housing numbers.
David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s:
The housing market may be in better shape than this time last year; but, when you look at recent trends there are signs of some renewed weakening in home prices. In the past several months we have seen some relatively weak reports across many of the markets we cover…While year-over-year results for the National Composite, 18 of the 20 MSAs and the two Composites improved, the most recent monthly data are not as encouraging. It is especially disappointing that the improvement we saw in sales and starts in March did not find its way to home prices. Now that the tax incentive ended on April 30th, we don’t expect to see a boost in relative demand.
Lawrence Yun, National Association of Realtors’ chief economist:
The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market. For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low.
Naroff Economic Advisors:
The government incentives to buy homes worked, but who knows where we go from here. Existing home sales surged in April as the federal incentives to buy came to an end. This, of course was expected. We saw a similar pattern last fall when the first iteration of the home buyers’ incentive neared an end. This time, even though long time owner were added to the mix, the run up in sales was not nearly as dramatic. Indeed, the peak was about 10% lower.
Calculated Risk:
Months of supply increased to 8.4 months in April. A normal market has under 6 months of supply, so this is high – and probably excludes some substantial shadow inventory. And the months of supply will probably increase sharply this summer…The increase in inventory is the big story.
Omair Sharif, RBS:
The sharp rise in supply in April could reflect a faster rate of foreclosures making their way to REO status (i.e. banks took possession of a larger number of homes and immediately put them up for sale), or it may be that potential sellers, sensing firmer demand, are trying to get rid of their properties. In either case, the April jump in supply put the current level of existing homes for sale nearly 3% above the year-ago reading, underscoring that while demand may be steadying, the supply situation still poses a headwind to the nascent housing recovery.
How do you feel about what the experts had to say?