Americans' Attitudes Improve on Housing

Consumers’ optimism toward the housing market showed a slight rebound last month, with more people now saying it’s a good time to buy or sell a home, according to Fannie Mae’s September 2014 National Housing Survey, based on about 1,000 Americans’ attitudes on the housing market.

 The share of consumers who say now is a good time to purchase a home rose to 68 percent in September, a four percentage point increase from August. Also, the share of Americans who said they’d prefer to buy a home on their next move rose to 66 percent, following a three-point drop the previous month. The percentage of those who reported now is a good time to sell grew to 39 percent. Those surveyed also were more upbeat about home prices rising in the next 12 months, with expectations of price gains of 2.2 percent, on average.

Consumers also showed greater optimism toward the overall economy, with 40 percent now saying the economy is on the right track, posting a five percentage point gain from last month.

"The September National Housing Survey shows a slight recovery in consumer housing sentiment after a two-month setback, bringing us back to the modestly positive trend we've seen over the last year," says Doug Duncan, senior vice president and chief economist at Fannie Mae. "It might be too late to save this year's home sales from posting the first decline in five years. However, the return to an upward trend in housing sentiment, combined with this month's positive news on the jobs front, suggests that a broad-based, albeit measured, housing recovery is on track to resume in 2015. The results of the past few months show that consumer optimism remains cautious and somewhat volatile, and we'll likely continue to see bumps on the housing recovery path reflected in our survey results."

Source: Fannie Mae, Published by Daily Real Estate News

Solving The Puzzle of Property Taxes

The National Association of Realtors has said that home values are slowly accelerating. That is not bad since we dont want a repeat of real estate bubble that happened several years ago. Tami Hoey of AZCentralfamily.com has published this article last year, but property taxes calculation does not change.

Good Morning Arizona,  called in an expert to help us understand property taxes. Attorney Don Miner says it's important to understand tax values. "When the market's fluctuating, it may take them a year, two years, even three years to catch up," Miner tells us.

Ratios can vary according to the type of property: Commercial, vacant land, owner occupied and rental.

Miner says take a close look at your notice of property valuation. "It comes toward the end of every February," says Miner. "Look hard at those values to be sure that they're not higher than your fair market value.

The notice of value will show the full cash value of the property, the limited property value of the property, the assessment ratio, and the appeal deadline.

Should You Consider Owner Financing?

With over 90% of mortgage loans owned or guaranteed by the U.S. government, lending requirements have tightened to the point that many otherwise qualified borrowers are unable to buy a home, especially with higher credit score and down payment requirements as well as private mortgage insurance. FHA loans, for example, require mortgage insurance on every loan.

Home sales due to tight lending have been held back as much as 15%, estimates the National Association of REALTORS®. That's left many homeowners and homebuyers frustrated.

Owner financing could be the answer for many. If the parties protect themselves by adhering to state regulations and use reputable sources to help navigate the transaction safely, including their real estate professionals and attorneys, it could be the ideal alternative to bank financing.


What is Owner Financing (#ownerfinancing)?

Owner financing simply means that the home's owner carries most or all of the buyer's note. In a volatile real estate market, owner financing can get homes sold that otherwise wouldn't sell, which benefits both sellers and buyers. All it takes is a legal binding agreement that spells out the terms of the loan.


Benefits to sellers

When the seller carries the note, he or she takes the place of the bank, assuming the risks such as defaults and damage to the property, and the rewards such as receiving market value plus monthly interest payments on the note.

A seller can sell a home without having to meet the repair and integrity standards set by FHA and conventional loan lenders.

A popular scenario is that the seller may require that the buyer pay rent-to-own until they accumulate enough for a conventional down-payment. A portion of the money is kept by the seller, and a portion goes into a trust so when the balloon portion of the note is due, the buyer can refinance with a conventional bank loan that pays the seller off.

Benefits to homebuyers

Buyers who have trouble meeting conventional loan standards for any reason are most likely to benefit from buying a home with owner financing. Because the seller collects a monthly interest payment and retains ownership of the home until the terms of financing are met, buyers can typically buy a seller-financed home with little or no money down. But, they can expect to pay higher interest rates for the privilege. The buyer can immediately start enjoying the benefits of homeownership, including rising equity and tax benefits.
Owner financing isn't just for buyers with low credit scores. It can also benefit buyers who want to buy a home but perhaps can't meet the 20% down-payment requirements of a conventional loan.

The Risks in Owner Financing

As in any transaction, there are risks. For the seller, it would be that the buyer stops making payments and loots or destroys the property. But in the case of a default, you take back the property with whatever the buyer has paid forfeited to you.

For the buyer, the risk is that the seller doesn't have clear title to the property, or that the owner-financed loan is tied to the seller's adjustable rate loan, which can be more expensive, some years, than the buyer can afford.

Your real estate agent may be negative about your selling the home this way, because agents are used to the formalities of banks. However, any problems that arise can be managed with proper protections for both sides. Consult a real estate attorney and your real estate professional for more information.

Written by Home Blogger, My Realty Times

Hispanics to Shape Future Housing Demand

A booming Hispanic population will be the key to the nation’s future residential real estate market, Julian Castro, the newly confirmed secretary of the Housing and Urban Development, told The Associated Press.

Nearly half of first-time homebuyers nationwide will be Hispanic in six years, according to a 2013 study from the National Association of Hispanic Real Estate Professionals. What’s more, Hispanics are forecasted to account for 40 percent of the estimated 12 million net new households nationwide within the next decade.

Castro says that an overhaul of federal immigration laws could further aid the U.S. housing market. Federal immigration law changes could add about 3 million home owners and generate more than $500 billion in sales, income, and spending into the housing economy, estimates the National Association of Hispanic Real Estate Professionals study.

"It's a significant contribution if we can get immigration reform done," Castro says.

Source: “Castro: Hispanics Key to U.S. Housing Sector Future,” Associated Press (Sept. 20, 2014)

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Mortgage Applications Plunges?

Just a slight trend higher in interest rates was enough to stall both potential home buyers and borrowers looking to refinance their loans.

Total mortgage application volume fell 7.2 percent last week from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association (MBA). The weekly index is now at its lowest level since December of 2000.

"Although the weekly increase in rates was small, they were trending up in the week following Labor Day, with many data reports showing a pickup in the pace of economic growth," said Michael Fratantoni, chief economist for the MBA.


written by Diana Olick,CNBC

Why Loans Are Still Hard to Get

In the early days, if you wanted a mortgage loan, you had to have a job, some down payment money and good credit. While that's still true today, loans are more difficult to get.

Lenders look for more information about you,  making the process take longer than it used to. If you're wondering why, the reason is buy backs. A buy back is a loan that the lender originally issued and then sold to another lender, mortgage servicing company or to Fannie Mae or Freddie Mac. 

If the borrower defaults on their loan, lenders want to know why.  Fannie and Freddie look to see if there was a problem in underwriting or something fraudulent about the loan that contributed to the borrower's default. If so, the lender could be forced to buy the loan back.

Explains David Reed, author of Mortgages 101, "When a mortgage company makes a home loan, it doesn't pull money out of its savings accounts, but instead utilizes a credit line from which it draws. The lender approves a loan, draws down its credit line by $300,000 to issue the mortgage. If a lender does this several times a day pretty soon that credit line would start to look a little thin. When a lender needs to replenish its mortgage coffers, it sells the loans it has already made to other lenders."

There are specific purchase agreements between lenders who buy and sell loans. These are called conforming loans, because the loan must meet certain criteria to be eligible for purchase by a secondary party. It can't exceed a certain amount, may require a minimum down payment and the credit scores of the borrowers may not be below 620, for example. That way lenders who buy loans don't have to re-underwrite a loan that's been certified by the original lender as a "sellable" mortgage, says Reed.

To avoid any potential buy back, lenders today are asking for more documentation than previously required, or asking that borrowers meet stricter credit terms than those required for conforming loans. The result is that lenders are taking more time to close loans.

Reed points out that if one were self-employed, the underwriter would ask for maybe one year's tax return. "Now, two years returns are required, and even three years, if the underwriter feels uncomfortable with a loan," he says.

The bottom line for borrowers is be prepared to offer more documentation and for the purchase transaction to take longer. That doesn't mean the lender is going to decline the loan.

In fact, one way to look at the situation is that it's an advantage for borrowers. It may be tougher to get a loan, but it's also going to be tougher to default.

Written by Blanche Evans, Realty Times