Home prices show biggest jump in 6 years in October!

Home prices increased 6.3% in October from a year earlier, the biggest year-over-year gain since 2006, according to Irvine research firm CoreLogic.

Prices dipped 0.2% in October from September, but such a drop was expected at the end of the home-selling season, the firm said Tuesday.

October marked the eighth straight month of year-over-year prices increases and added to recent evidence of growing strength in the housing market. CoreLogic reported Monday that foreclosures were down 17%
in October from a year earlier.

“The housing recovery that started earlier in 2012 continues to gain momentum,” said Mark Fleming, CoreLogic’s
chief economist. “The recovery is geographically broad-based with almost all markets experiencing some appreciation.”

Home prices increased 21.3% in Arizona, the most of any state. California saw a 9% increase. Prices increased
from October 2011 in all but five states — Alabama, Delaware, Illinois, New Jersey and Rhode Island.

The Phoenix-Mesa-Glendale area in Arizona had the largest year-over-year price increase of any metro area, at 24.5%. The Riverside-San Bernardino-Ontario metro area was second at 7.3%. And the Los Angeles area was fourth at 6.4%.

Excluding foreclosures and other distressed sales, home prices nationally increased 5.8% in October from a year
earlier. Those prices were up 0.5% from September, the eighth straight monthly gain.

 

Source: LA Times

Top Reasons to Opt for Seller Financing!

Seller Financing

Top Reasons to Opt for Seller Financing

Seller Financing has benefits for both the buyer and the seller

A recent experience of mine reminded me of the importance of seller financing. The son of a longtime friend of mine recently caught me at a Friday night high-school game and informed me he and his wife had turned down an older home in the neighborhood they always wanted, for a new home in a subdivision.

They also declined the possibility of no-cost seller financing from the owner of the older home because the builder offered a slightly lower rate on the new home.

“We just felt like we wouldn’t have to do anything on the home for years,” Patrick said. “We couldn’t afford any expensive surprises.”

While I disagreed with him on both topics, I kept my opinions to myself because he had already made his decision and was looking forward to moving into his new home. Here’s why I would have chosen differently.

First and foremost, you can always repair or remodel a home, but you can never single-handedly fix a neighborhood. If you know the schools, churches and streets that are important to you, it’s usually best to buy where you have done your primary research. And, new homeowners often underestimate upkeep.

But just as important are the credit and cash needed to get a loan today. Lenders are being more cautious and are demanding more skin in the game.

Recently, Fair Isaac Co., the developer of FICO scores, revealed that 78.5 percent of all consumers have scores that fall between 300 and 749. The FICO score ranges from 300 to 850. So only about one in five American have a FICO score of 750 or higher.

Ellie Mae Inc., a provider of mortgage origination software to lenders, reports that borrowers approved for mortgages in September had an average FICO score of 750. What message does that send to prospective home buyers?

Besides high credit scores, borrowers are coming in with higher down payments to satisfy lender requirements. According to Ellie Mae, home buyers who used a Fannie or Freddie loan had, on average, a 21 percent down payment. Homeowners who refinanced had average equity in their homes of 30 percent.

Doug Duncan, Fannie Mae’s chief economist, recently said he thought that loan standards will eventually ease as banks reduce some extra risk-based fees that they have added to benchmark quotes since the mortgage meltdown.

But is there a viable plan B? What if you didn’t have to go to a lender for a home loan?

Seller financing is an underestimated benefit not only because of today’s increased lender scrutiny, but also because the buyer dodges most all the fees associated with the loan. For example, in Patrick’s case, he decided on a 3.5 percent loan from a lender rather than a 4 percent loan from the homeowner.

Let’s say the total costs of a $200,000 loan come to 2 percent of the loan amount, or $4,000. The monthly difference between a 3.5 percent loan and 4 percent loan is approximately $57 a month. Not only would Patrick have to borrow more or come out of pocket with the extra funds (in addition to the down payment needed on the house), but he would also need more than seven years to make up the monthly difference.

While many owners make “cash-out, conventional” financing a requirement when selling a home, others are more than willing to negotiate price and terms. Homes are selling quickly in many neighborhoods, but others continue to sit. It’s those owners who can be “all ears” if it means closing a deal and moving on with their lives.

And, some sellers, particularly seniors with no high-rate place to park their cash, are not opposed to accepting a healthy down payment and “carrying the paper” on their real estate as long as they are guaranteed 4 percent interest on their money. In most cases, it’s difficult to get that rate in non-risk accounts.

Buyers and sellers can build in safety features to make carrying the paper palatable for both sides. If you are a buyer, there’s no harm in asking. You could save time, anxiety and a lot of cash — an inexpensive surprise.

If you’re looking to buy, lease, or lease – please contact me at 310.402.8181 or jkryukova@gmail.com

Click here to visit my website

Source: Inman news

Rate on 30-year mortgage falls to record low!

The average rate on a 30-year fixed mortgage fell this week to a record low for the seventh time in eight weeks.

 

Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan dropped to 3.66% from 3.71% last week. It’s the lowest rate since long-term mortgages began in the 1950s.

The average rate on the 15-year mortgage, a popular refinancing option, declined to 2.95%. That’s down from 2.98% last week and just above the record 2.94% of two weeks ago.

The rate on the 30-year loan has been below 4 % since December.

Low rates could provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less on their loans and have more money to spend.

 

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

And the yield will likely fall even lower now that the Federal Reserve has said it will continue selling short-term Treasury securities and using the proceeds to buy longer-term Treasurys. That goal of the program is to drive long-term interest rates lower to encourage more borrowing and spending.

 

To calculate average rates, Freddie Mac surveys lenders across the country Monday through Wednesday each week.

The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans was 0.6 point, down from 0.7.

The average rate on one-year adjustable rate mortgages fell to 2.74% from 2.78% last week. The fee for one-year adjustable rate loans was unchanged at 0.5 point.

 

 

Good time to buy – Mortgage Rates at Record Low

Mortgage rates have hit a record low, making homes even more affordable for prospective buyers.

According to mortgage backer Freddie Mac’s Primary Mortgage Market Survey, the average 30-year fixed rate loan fell to 4.15% this week – its lowest level in more than 50 years. Previously, the record low was 4.17%, which was set the week of Nov. 11, 2010. Last week, the 30-year rate was 4.32%.

The average for the 15-year fixed-rate mortgage was 3.36% this week, down from 3.5% last week.

“The Federal Reserve’s policy statement last week and ongoing market concerns over the European debt market carried momentum into this week allowing all mortgage products in our survey to reach all-time record lows,” said Frank Nothaft, vice president and chief economist at Freddie Mac.

The rock-bottom rates have made it even more enticing for those who are looking to buy a home to act now.

Housing affordability – the percentage of homes sold during a quarter that are within the reach of people earning the median family income – had already been trending near record levels before mortgage rates started to plunge, according to a report from the National Association of Home Builders (NAHB) and Wells Fargo released Thursday. The organization said that when a family spends 28% or less of its gross income on housing expenses it qualifies as affordable.

Yet, despite the extremely favorable conditions, most housing markets remain depressed.

“At a time when homeownership is within reach of more households than it has been for more than two decades and interest rates are at historically low levels, the sluggish economy and the extremely tight credit conditions confronting home buyers and builders remain significant obstacles to many potential home sales,” said Bob Nielsen, NAHB’s chairman and a home builder from Reno, Nev.

Sales of existing homes fell month-over-month in July, according to the National Association of Realtors (NAR), although they’re up from 12 months earlier. Meanwhile, new home sales have been crawling along at about a quarter of what they were during the housing boom

While mortgage rates will probably head lower, any further rate declines would probably be small, according to Ken Johnson, a professor of real estate at Florida International University.

Rates closely track yields on U.S. Treasury bonds, which have also plummeted this week. The 10-year note hit a record low on Thursday, falling below 2% to 1.99%.

“The banks would fall into a liquidity trap [if rates go much lower],” he said. “If they can’t make money lending, they’ll stop.”

25 Best Places for Affordable Homes

For now though, each tenth of a percentage point that a mortgage rate drops results in a savings of about $6 a month for every $100,000 borrowed. The monthly bill for homeowners getting $200,000 mortgages this week would be about $20 less than if their mortgages were issued last week. Over the course of a 15- or 30-year mortgage, that can result in considerable amount of savings.

According to NAHB, even before interest rates started diving, about 72.6% of all homes that were purchased during the three months ended June 30 were affordable to an American family earning the median income of $64,200.

Best Places: Best home deals in top 10 place

In some markets, such as Youngstown, Ohio, the most affordable major market in the nation, nearly 94% of all homes sold last quarter could be bought by families earning the area median income of about $55,000.

Syracuse, NY, at an index of 92.6%. Indianapolis at 91.6% and Dayton, Ohio at 90.7% were also very favorable markets for home buyers.

The least affordable market was New York City, where the median price of homes sold during the quarter was $424,000 and where only a quarter of homes sold during the quarter were affordable to those earning the median area income of $67,400.

Three other least-affordable markets were all in California: San Franciscoat 27.5%, Santa Ana at 40.5% and Los Angeles at 41.6%.

NAHB and Wells Fargo’s data underlines the stark contrast between expensive coastal markets, where most of the least affordable markets lie, and the heartland, where the most affordable cities are.

“I think prices are turning around,” he said, “especially in middle America, but the turnaround will be very slow. “

The record-low mortgage rates, combined with increasing affordability in some markets, could be the catalyst needed for some home buyers who were sitting on the fence to stop renting and put some money on the table.

“It’s silly not to buy right now — if you can,” said Johnson.

 

 

 

 

Source: CNN Money 8/18/11