Pending Home Sales Up In Nearly All Regions

Pending home sales mostly increased across the country during the month of July, with all regions except for the Midwest experiencing contract signing gains.

The National Association of REALTORS®' Pending Home Sales Index, which is based on pending sales of existing homes, hit 105.9 in July, up from 102.5 in June. This marks the third consecutive month that the index is above 100, a score that is considered to be the average level of contract activity.

Regionally, the Northeast saw the biggest gains in pending home sales, with a 6.2 percent jump from 83 in June to 89.2 in July. The South experienced a 4.2 percent increase to an index of 119, while the West’s index rose 4 percent to 99.5 in July.

The Midwest – the only region that did not post gains in pending home sales last month – experienced a slight decline, falling 0.4 percent to 99.5.

The overall increase in pending home sales can be contributed to favorable housing conditions, according to NAR Chief Economist Lawrence Yun.

Yun cited lower interest rates, moderate price growth, and an increase in housing inventory as reasons for the PHSI’s climb.

“The increase in the number of new and existing homes for sale is creating less competition,” Yun said, “and is giving prospective buyers more time to review their options before submitting an offer.”

The improvement of the job market is also helping family finances and giving more people confidence to enter the housing market, Yun said.

Despite the increase in the PHSI, housing sales in 2014 are still below 2013 levels. Yun said he expects existing-home sales to be down 2.1 percent this year, falling from 5.09 million sales of existing homes in 2013 to approximately 4.98 million sales in 2014.

Source NAR

Remember Fair Housing Month - #fairhousing

April is Fair Housing Month, a time to remember the landmark protections offered by the enactment of Title VIII of the Civil Rights Act of 1968. April 11th marked the 46th anniversary of the law, which provides equal housing opportunities regardless of race, religion, or national origin. (Gender was added as a protected class in 1974, and people with disabilities and families with children were included in 1988.)
The National Association of REALTORS® offers a variety of resources to help brokers and agents, as well as state and local associations, reaffirm the commitment to upholding the tenets of fair housing law

Everything You Need to Know About Fair Housing:

• The Fair Housing Program
• Fair Housing Month
• The Right Way to Take On a Fair Housing Challenge
• 4 Things You Didn't Know About the Fair Housing Act
• 7 Fair Housing-Safe Niches
• Profile Info May Violate Fair Housing
• 3 Ways to Respond to Buyer Questions That Challenge Fair Housing Law
• Are We Fair Enough?

Written by Wendy Cole from Realtor Mag

More on Buying vs Renting

BUY OR RENT?

* Factors to consider when buying

Home price: Metro Phoenix's median resale home price is currently $211,000.

Rootedness: How long do you plan to live in the area? Based on forecasts for home-price increases, most current home buyers likely will need to hold onto a home for two to three years if they expect to sell without taking a loss.

Mortgage rates: The average rate for a 30-year fixed-rate mortgage is 4.37 percent.

Down payment: Most lenders are requiring at least 10 percent of the purchase price now, but for borrowers with less-than-stellar credit, the down-payment requirement could be as high as 20 percent.

Taxes: Property taxes fluctuate across the Phoenix area, but a homeowner with a house valued at $211,000 likely would pay at least $600 a year.

Tax breaks: Homeowners with a $200,000 mortgage and a 4.5percent interest rate can save $3,000 to $3,500 on their federal taxes if they itemize, according to Bankrate.com.

Maintenance: Homeowners with a house valued at $200,000 to $250,000 pay between $3,000 and $5,000 to take care of the house a year, according to industry sources.

Insurance: The annual median cost for $100,000 of coverage on a Phoenix home is $500, and about $1,000 for $300,000 of coverage, according to the Arizona Department of Insurance.

Homeowners association: Monthly fees vary, and not all communities have HOAs.

* Factors to consider when renting

Rent: The average rent for a metro Phoenix apartment is $820 a month, according to research firm Axiometrics.

Rootedness: How long do you plan to live in the area? Most landlords require at least a six-month lease. In popular areas and for nice apartments and homes, a 12-month lease is the norm.

Rent increases: The average Valley apartment rent climbed 4.5 percent during the past year, so to stay in the same place next year, expect to pay $40 more a month.

Security deposit: Most landlords require one month. Pet deposits vary.

Renters insurance: To cover $15,000 in personal items, the median cost is about $200 a year, according to the Arizona Department of Insurance. To cover $40,000, the median is about $400.

THE BOTTOM LINE: Cost to buy versus rent

* Initial costs

Buy: Down payment of 10 percent on a $211,000 home is $21,100.

Rent: Average deposit of $820, plus potential pet deposit.

* Monthly payment

Buy: Typical mortgage payment of $1,150 on $190,000 loan with interest rate of 4.37 percent, plus property tax and insurance payments.

Rent: Monthly payment of $850 including renters insurance.

* Annual cost

Buy: $3,000-$10,000 depending on costs to take care of the house and homeowners-association fees.

Rent: None.

* Income-tax benefits

Buy: $3,000-$3,500 a year.

Rent: None.

Return on investment

Buy: Depends on home-price increases and how long you own the home.

Rent: None.

WHY HOMEOWNERSHIP LEVELS HAVE DROPPED

In 2012, the metro Phoenix homeownership rate fell to 62.9 percent from 67.3 percent in 2009.

During the housing boom, the region's rate hovered around 70 percent.

The trend doesn't seem to be turning around. Home buying has slowed from last year. In June, home sales were down 11 percent compared with June 2013.

For those without $10,000 to $40,000 for a down payment, there's no option to buy now. The risky mortgages that required little to no down payment during the housing boom are long gone. Lenders require 10 to 20 percent down now.

There are more options to rent now since investors purchased more than 150,000 Phoenix-area houses during the crash and converted them into rentals. And apartment developers are building more complexes in popular neighborhoods across the Valley.

THE CASE FOR BUYING

Rents have been rising along with home prices, making houses yet again a potentially good investment.

The area's median sales price has rebounded more than 65 percent since the crash to $211,000. But according to mortgage research firm HSH Associates, metro Phoenix remains the nation's eighth-most-affordable big U.S. city to buy a home.

It calculated that buyers need to earn $42,125 a year to purchase a median-priced house in the area.

THE BOTTOM LINE

Anyone trying to decide between buying and renting should consider all of the costs and factors: long-term plans, interest rates, maintenance costs, deposits, tax breaks and the best investment for their money.

Real-estate analyst Mike Orr of Arizona State University has this advice for those on the fence about what to do.

"Don't worry about trying to time the market or buying something that's good for investment," said Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business.

"Just find somewhere you really love and can comfortably afford."

Source:  AZCentral.com

Rental Payment History Can Help Boost #Credit Scores

The addition of rental payment data to credit files may help more potential renters become home owners.

Experian became the first credit reporting agency to add on-time rental payments to its database. It recently conducted an analysis;to determine how the added rental information has aided consumers’ credit files.

The study found that subprime and nonprime residents saw the greatest positive score impact by the addition of rental histories. Nineteen percent of the study participants that were considered subprime moved to at least one higher – or less risky – risk segment by the addition, opening them up to more affordable credit and additional credit opportunities, the study noted.

For the previous unscoreable, adding the rental data has now allowed them to have a credit score, with the majority now falling in the least risky prime category too, Experian’s analysis shows.

“Consumer financing rapidly changed during the economic upheaval, and regulatory changes forced lenders to tighten the standards for the underwriting process,” says Genevieve Juillard, president of Experian Consumer Information Services. “This excluded many Americans from the opportunity to attain credit due to a limited or no credit history. Residents who pay their rent on time month after month should be rewarded and not overlooked simply because they rent instead of own the place they call home.”

Source:Experian from Realtor Magaizine Online

4 Ways To Get An Offer Accepted When Buying A House

Geoff Williams from US Moneys new said "Buying a house is a little like asking someone to marry you. In both cases, you make your offer believing there's a good chance you'll get a yes, but you know you could get a no. If the answer is yes in either situation, your fates will be linked for many years to come – possibly until death do you part."  There are four rules home buyers should follow if they want sellers to accept their offer.

1. Be nice: While money is important, buyers should also be likable and avoid making negative comments about the house or discussing their renovation plans in front of the seller, keeping in mind that sellers have an emotional connection to the property. "Don't tell someone how bad, ugly, stupid, et cetera, their house is and then try to buy it. That doesn't work," notes Marc Takacs of Atlanta-based Keller Williams Realty.  So when the seller is present don't mention the great plans you have for the house.
2. Be amiable: Buyers also should avoid making unreasonable demands, such as super-quick closing dates, and they should avoid low-ball offers that could be perceived as an insult or offers that are too high and difficult for them to afford. 
3. Be calm: Visiting the listing too often and for long periods of time also will annoy sellers. 
4. Be rational: Buyers should avoid waiving the home inspection or appraisal contingency simply to get their offer approved, as they will regret such a move later on if a leaky roof or mold is discovered or they learn that they overpaid for the house.

Source: 4 Rules to Live By When Making an Offer on a House," Geoff Williams.U.S. News; World Report (Aug. 5, 2014)

How to Improve your FICO Scores Quickly

With mortgage interest rates still low, you may want to refinance or buy a new home before rates go higher again.  The question is will you qualify to refinance or get a new mortgage for a new home?

Since the recession, lenders have tightened loan qualification and they used credit scores to determine if you qualify for a loan and at what interest rate. 

Credit scores make a significant impact. For every 20-point credit score increase, according to Zillow, the average low APR declines 0.12 percent, a savings of $6,400 on a $300,000 home over 30 years. 

FICO scores are based on your credit history from 3 credit reporting bureau:  Experian, Trans Union and Equifax and each one calculates its own score.  The first thing you need to do is to review your credit report for errors and resolved them as quickly as possible by filing a dispute to the credit bureau that reported the error. 

Here are some do's and don'ts to improve your credit score:

• Don't close credit card accounts. FICO scores utilize a credit utilization ratio that turns against you because it appears that you might be overusing your available credit.
• Don't max out or consolidate credit cards. Credit card companies like it if you only use about 30% of your available credit on your card. You're better off having small balances on multiple cards than a large balance on one card.
• Don't apply for new revolving credit or transfer balances. If you're buying a new home, it's tempting to buy some new furniture, but don't open that account until after your loan closes. You don't want "inquiries" to be raised in the scoring algorithm.
• Don't change jobs right before you apply for a home loan, although job changes within the same field are considered more favorably in scoring.
• Do pay all bills on time and with at least the minimum payment due. Lenders like on time payment histories.
• Do pay down your debt, as lower income-to-debt ratios are attractive to lenders. Start by reducing credit card balances first, beginning with the balances that generate the highest interest rates. Revolving credit is considered riskier debt than installment loans such as student loans or car payments.
• Do shop lenders simultaneously. Credit score software takes into account several inquiries from mortgage lenders as normal, but if you space rate-shopping out over weeks or months, that could impact your credit score negatively.

Mortgage lenders are most interested in your ability to pay.  The most important factors are job and debt payment history.

Mortgage Rates Hover at Yearly Lows

Mortgage rates have remained mostly steady in recent weeks, keeping borrowing costs near 2014 lows, Freddie Mac reports in its weekly mortgage market survey.

Freddie Mac reports the following national averages for mortgage rates for the week ending July 31:

• 30-year fixed-rate mortgages: averaged 4.12 percent, with an average 0.6 point, dropping from last week’s 4.13 percent average. Last year at this time, 30-year rates averaged 4.39 percent.
• 15-year fixed-rate mortgages: averaged 3.23 percent, with an average 0.7 point, falling from last week’s 3.26 percent average. A year ago, 15-year rates averaged 3.43 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.01 percent, with an average 0.5 point, rising from last week’s 2.99 percent average. Last year at this time, 5-year ARMs averaged 3.18 percent.
• 1-year ARMs: averaged 2.38 percent, with an average 0.4 point, dropping from last week’s 2.39 percent average. Last year at this time, 1-year ARMs averaged 2.64 percent.

Source: Freddie Mac

For years, several homeowners were prevented from moving up because of negative equity which means that they owe more than what the house is worth. They were locked-in to their location because of their low home values. Now that the economy is improving and their home market value has increased, they don't want to move because of the rock bottom rate they have when they bought or refinanced last couple of years. In late 2012, the interest rate was 3.3%. Now that the interest rate is starting to head back up, they are hesitant to move.

 

 John Moony, managing vice president of Guaranteed Rate, a national mortgage company based in the Chicago area, says that even a 1 percent increase in mortgage rates can make a big difference in a home owner’s decision-making process. He says a 1 percent increase in interest rates generally equates to a 10 percent reduction in purchasing power. In practical terms, that means a family looking to keep their mortgage payment below, say, $1,500 a month will need to lower the maximum price they can pay for a house from $300,000 to $270,000 if interest rates go up one percentage point.