Posts Tagged ‘mortgage’

Events Solidify Burlington Mortgage Rate Speculation

Several weeks ago there was another interest rate development—though it was a slightly whipsawed kind of development. Since mortgage interest rates are so important to the bottom line in all but all-cash Burlington residential home sales, the direction rates are headed is something worth watching closely.

It was one of those days that come about twice a year. It was the occasion when the Federal Reserve Chairman is called upon to testify before Congress. The date is set as a biannual marker for revealing what’s likely to lie ahead for interest rates. If the Fed is going to decide to raise the Fed Funds rate, it’s usually the single strongest pointer to higher mortgage interest rates. All things being equal, that would eventually slow Burlington’s real estate market activity by making mortgage payments more expensive.

As the appointed hour for the testimony neared, Reuters weighed in early. At about 8:30 in the morning, they reacted to the advance copy of Chairman Yellen’s prepared remarks. Reuters reported on some key paragraphs citing the continued gathering strength of the economy—which would, therefore, “warrant gradual increases in the federal funds rate over time.”

Not great news for Burlington mortgage rate watchers—or was it? Reading more closely, there were those “gradual” and “over time” phrases. Wouldn’t that lead one to think the raises would be slow and gradual? Possibly more slow and gradual than previous Fed hints had led us to believe?

Ninety minutes later came the actual testimony, followed by questioning from the congressional committee. CNBC saw good news for Burlington mortgage applicants: “Fed stands ready to slow down rate hikes” was their takeaway. Sooooo, the Fed was going to raise the Fed funds rate (bad), but more slowly than expected (good).

The picture became clearer as the Mortgage News Daily pointed to newly released retail sales and consumer inflation reports showing “economic data that coincides with rates moving lower.” And despite anything the public hearing had produced, in MND’s opinion, “the Fed is less likely to flip the switch on those plans.”

So Burlington buyers and sellers could head into the coming days with few worries about interest rates, which remain at appetizingly low levels. If you are thinking of taking a look at some of the terrifically affordable Burlington home buys they make possible, today would be a good time give me a call!

Joan Parcewski —CRS, MRP, CSHP, SRES, CBR, LMC, Realtor & Notary
978-376-3978   JParcewski@LAERRealty.com    OR    JParcewski@gmail.com
 
Licensed MA & NH    
Introductory Video  https://youtu.be/RrM4q17cjU0
Laer Realty Partners    Joan_Parcewski (1 of 1)

Get a Discount on Your Mortgage

If you may have had a challenge getting a mortgage, this program could help you.

Get a Discount on Your Mortgage.

Joan Parcewski   Woods Real Estate   joan@woodsre.com    978-376-3978    www.JoanParcewski.comJoan_Parcewski (1 of 1)

5 Next Steps When the Appraisal Comes In Too Low – A Reprint From Trulia

While low appraisals can be particularly potent deal killers, their danger to your deal can be neutralized in some cases. If you find yourself facing an appraisal lower than the sale price in the contract, add these five steps to your immediate action plan.
1. Appeal errors or bad comps to the appraiser. Read the entire appraisal report, cover to cover. See if you spot any errors – it’s not at all unheard of for an appraisal report to miss a bedroom or underreport the home’s square footage. The trouble is that what starts out as a clerical error can often result in the application of the wrong “comparables” when it comes time for the appraiser to pick the properties to use as benchmarks of your home’s fair market value.

Whether or not you find actual errors in the details about the home you’re buying or selling, check in with your agent about whether the comparable properties used by the appraiser were reasonable, especially if they are from a different neighborhood, school district, town or construction era than the home you’re trying to buy or you are aware that much more similar or nearby homes have been sold in recent times than the comparable properties you see in the appraisal.
In my town, for example, within a half-mile radius you can find vast variations in property values based on neighborhood and schools and city limits that change almost imperceptibly. Changes in the mortgage industry over the last few years have created situations in which appraisers are sometimes assigned who have little or no familiarity with these hyperlocal types of nuances which you, as a party to the transaction, might be more readily able to detect and appreciate.

If you find errors or feel that there are much more comparable recent sales that justify a higher price for the property, work with your agent to send the correct information and the applicable comps you would propose to your mortgage professional, who can relay that information to the appraiser or Appraisal Management Company and request that the appraiser revise their report and estimate of value. The appraiser has no obligation to make the change, but the more glaring the error, the more likely it is that they will.
2. Ask for a second opinion. Particularly in cases of error or bad comps, if the appraiser ignores your request to revise the report, you might need to escalate your request to the lender itself. Here’s where it’s important to be working with an expert agent and mortgage pro with a great reputation; if they believe strongly in your case, they may be able to plead it to the underwriter and request that a second appraisal be done. The idea here is that if the second appraisal backs up your arguments, listing the correct property details or more accurate comparables, the lender is much more likely to exercise its discretion to deem the first one a dud and go with the second opinion.
3.  Renegotiate.Low appraisals disappoint everyone around the negotiating table. If the sellers have the leeway (read: equity) or their bank agrees (in short sales), they might agree to bring the price down to the appraised value or near enough that the buyer feels comfortable putting some extra cash into the deal to close the purchase price-to-appraised price gap.  Some buyers refuse to ever do this on general principal, as they feel like it’s overpaying for the property.  Others realize that appraisals may come in low for reasons less indicative of the property’s value, like a dearth of comparable sales in the area, and figure that to get the home they want, they’re willing to kick in a little extra dough.

Of course, ‘little’ is relative, and neither position is right or wrong for everyone.

And the decision for sellers is just as personal. When the differential between the purchase price and the appraised value is small, it can seem like a no-brainer to bring the price down if mortgage considerations allow, but it can also seem sensible to request the buyer to make up such a small difference – especially in markets where properties are getting multiple offers.  On the other end of the spectrum, when the differential is big, it is less likely that the buyer will want to come up with the cash to close the gap, and also less likely another buyer will come along and offer the appraised price.

You would think these things would make a seller more willing to slash the price where the gap is big, but it also may make their moving plans less feasible, and tempt them to stay put and wait on the market to be more active and bear better comps.

Work with your agent to figure out what re-bargaining position really works for you.

If you do find yourself renegotiating price due to a low appraisal, remember that this is real estate, so everything is back on the table. For example, when the appraisal gap is only $1,000, a buyer might be willing to close the gap if the seller agrees to leave the lawn mower and do some small repairs.
4. Pay the difference or split the difference. On the flip side of renegotiating is reconsidering your personal position. If you’ve been house hunting for two years, forgoing low rates and the tax and lifestyle advantages of owning your home, and you’ve finally found ‘the one’ – in great condition, not a short sale, perfect location – you might think long and hard about whether you are willing to pay the difference between a low appraisal and the purchase price. This is especially so when the gap is small and you have the cash, or when you know the seller is barely breaking even on the deal or has offered to split the difference with you, or the short sale bank refuses to go any lower.

And sellers, this goes for you, too: if you’re committed to trying to close the deal, it behooves you to consider whether you can reduce the price on the home. Consider that in some states and loan situations, a low appraisal report in a deal that dies may become a disclosure the seller must provide to future buyers (ask your agent whether this will apply to you). The fact is, if you don’t agree to a price reduction of some sort, the buyer could very well walk, limiting your options to selling at a lower price, doing a short sale or staying put anyway.
5. Change lenders. Mortgage banks have more control when it comes to choosing appraisers than mortgage brokers do. (Fortunately, many experienced local mortgage brokers work for companies that also have banking divisions, and may be able to process your loan through that division in an effort to get your transaction a fresh start and work around a low appraisal.  Ask your mortgage broker if their office has a banking division, if you’re not sure.)

Mortgage brokers are no longer able to hand-pick appraisers for a given transaction like they once could, but unlike broker-only firms (who are forced to work through a middleman company that may pay a cut rate, attracting less experienced appraisers), mortgage banks and hybrid broker-bankers are allowed to pick the set of people included on their own short list of appraisers. I’ve found that lenders use this short list for good much more often than to try to exert any sort of inappropriate influence.

My experience has been that, when compared with the appraisers national lenders and the middleman companies put to work on brokered transactions, small mortgage banks and local, hybrid broker-bankers tend to fill their lists with appraisers who have more local experience and can appreciate the uber-important local nuances like those described in #1, above

Top 3 Ways to Turn a Seller Off – A Reprint

This reprint comes from Trulia.com.  It is right on when it comes to buyers. 

Buying and selling a home is a very personal and very emotional time – both from the perspective of the buyer and the seller.   Buyers – you really want to buy this house – make the best possible deal, get the most for your money.  Sellers – you want to seell this house –  make the most profit, get the most you can for all you have invested both financially and emotionally.  And keep in mind there is a market out there of similar homes that help both sides determine what is a fair price – Ultimately the price of each home sold in a neighborhood affects the market value price of the rest of the homes.  This is why foreclosures and short sales have an effect on other home values around them. 

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Buyers, if you want a home’s seller to play ball, best practice is to avoid these 3 pitfalls:

1. Unjustified, extreme lowball offers: It’s no secret that buyers have the upper hand in many markets right now. (To be clear, I said ‘many’ – not ‘every’ – your agent can help you understand what the dynamics are in your market.) But let’s be realistic, here. No seller can afford to give away their home at a price far below what it’s worth on today’s market. Lowballing a seller at a price far below the recent sales prices of similar homes in the neighborhood on the ‘let’s-take-a-stab’ plan, is highly likely to turn them off.  And that, in turn, will cause the seller to view your offer – and you – as disrespectful and wasteful of their time. Not only will they turn down your offer, but they may not even bother with a counteroffer, rendering your efforts at securing that particular home dead in the water. Buyers: Review the recent sale prices of similar homes in the neighborhood (aka “comps”) with your agent before you make your offer. Also, ask them to help you factor in other market data, like the average list price-to-sale price ratio and the average number of days neighborhood homes stay on the market. It’s all right to come in lower than asking, if the market data supports such an offer; just be sure your offer is based on reality – and not your fantastical hallucination about scoring the bargain of the millennium.

2. Buyer-side mortgage fails: Plenty of employed buyers with decent credit and cash in the bank have been turned down for a mortgage these past few years. That means buyers can’t assume (a) that they’ll be approved for the amount of loan they need to buy the house they want, or (b) that they’ll be approved for a loan at all. Your inability to get approved for a home loan can create all sorts of problems not just for you, but also for your home’s seller. The average seller’s  worst case scenario is that  they accept your offer only to find out a few weeks, or months, later that you can’t get the loan you need to close the deal. Buyers: It’s not overkill to start working with a mortgage professional as far as six months or a year in advance of starting your house hunt to get pre-approved for a loan. Make sure you get a clear understanding of the amount you qualify for, then work with your real estate agent from there to determine the price range you should house hunt in. And whatever you do – don’t buy a new car, open new credit cards or even change your line of work before your escrow closes, unless you consult closely with your mortgage professional before you make that move. Tip for Sellers: Work with your agent to vet buyers before you sign a contract. Factor in their down payment and earnest money deposit, and feel free to counteroffer these items, not just the offer price. It’s not overkill to have your agent contact the buyer’s mortgage broker to see how reliable the buyer’s pre-approval really is.

3. Bashing the seller’s home: Home bashing happens when buyers start bad-mouthing (aka “trash talking”) the place and/or the neighborhood in hopes of getting a lower asking price. Examples: pointing out all the foreclosures in the area, saying the house down the street just sold for much lower than the asking price on this house, saying you’ll need to rip out the entire kitchen before you even consider moving in – saying any of these things to a seller who happens to be at home during the showing or the inspection is probably one of the fastest ways to turn them all the way off. Buyers: Bad-mouthing a house or neighborhood won’t work to get you a lower price. Instead, it only serves to irritate the seller and motivate them to come up with all sorts of reasons why they shouldn’t sell their home to you! Remember: homes hold incredible emotional experiences for owners. Make an offer you’re comfortable with and keep the negative comments to yourself. If there are legitimate, factual reasons underlying your decision to make an offer at a price the seller might see as a lowball, ask your agent to respectfully communicate those facts to the seller’s agent.

A Realtor will help you not make these mistakes.  Listen to their advice. 

MSNBC Reports Mortgage Rates Tumble to Record Low

This is great news for people wanting to refinance or buy a  home. 

 

Mortgage rates tumble to record low        

            Average on the 30-year home loan slides to 3.87 percent from 3.98 percent

30-year fixed mortgage rates chart

        The average rate on the 30-year fixed mortgage dropped to the lowest since records have been kept, creating a tempting target for people to refinance their homes.

Freddie Mac said Thursday the average rate on the 30-year fixed mortgage hit 3.87 percent, down from 3.98 percent the prior week. That’s below the previous record of 3.88 hit two weeks ago.

The average on the 15-year fixed mortgage fell to 3.14 percent, also a record low. Records for mortgage rates date back to the 1950s.

Mortgage rates tend to track the yield on the 10-year Treasury note, which fell below 1.9 percent this week.

Mortgage rates have hovered near 4 percent for the past three months, and have perhaps contributed to a slight improvement in the housing market. But many homeowners remain underwater and the pipeline of foreclosures continues to be huge, putting heavy pressure on housing prices.

High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don’t want to sink money into a home that they fear could lose value over the next few years.

Sales of previously occupied homes were dismal last year. New-home sales in 2011 were the worst on records going back half a century.

Builders are hopeful that the low rates could boost sales next year. But so far, they have had a minimal impact.

Mortgage applications have risen slightly over the past four weeks, according to the Mortgage Bankers Association. But they are coming off extremely low levels.

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

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year loan rose to 0.8 from 0.7; the average on the 15-year fixed mortgage was unchanged at 0.8.

For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.85 percent. The average on the one-year adjustable loan rose to 2.76 percent from 2.74 percent.

The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable

The Associated Press contributed to this report.

Having the right amount of home insurance

I would like to welcome our guest blogger – Tony Lucacio from Merrimack Valley Insurance in Billerica.   You will find Tony every 2nd Wednesday of the month, here on our blog.

Personally I have I always know I can reach out to him to answer any questions I may have regarding insurance for a home, condo, etc and to help a client who is purchasing a new home

Trying to save dollars on home insurance may not be the way to go.  Read Tony’s explanation of why:

Today’s home owner’s are rightfully looking for saving dollars where ever possible. However, cutting corners on your Massachusetts home insurance may have serious financial consequences at the time of a loss.

A common misconception among home owners is that because the value of their home has decreased over the past few years that they are now able to decrease the amount of coverage on their home. But, your home insurance property value is not based on the market price, but rather the cost of construction. It is entirely possible, and likely for many homes, that the cost to rebuild a home is greater than what any sale could bring on the open market.

The penalty for being underinsured at the time of the loss can be financially crippling. Your policy has a coinsurance clause that establishes the minimum amount of insurance you must purchase in order to be made whole at the time of a loss. A coinsurance amount of 80% requires you to carry insurance equal to 80% of the construction value. The following is an illustration of how your claim is calculated.:

(Insurance Purchased / Amount Required) X Loss Amount = Loss Payment

Consider a home with a replacement value of $250,000 and a 80% coinsurance requirment, or $200,000. The homeowner only purchased coverage of $150,000 believing that was sufficient to cover his mortgage or any damage. That same home now has a fire with damage totaling $50,000. The calculation would be as follows:

(150,000/200,000) X 50,000 = $37,500

You can see the claim payment of $37,500 would leave the home owner with a financial loss. And this would be before applying the deductible, usually $500 or $1000.

What should homeowners do to not be underinsured? Tony Lucacio at Merrimack Valley Insurance Agency suggests you speak with your agent and have them assist you with calculating your needs. They will have up to date information in order to assist with deciding how much coverage will cover your needs.

No rush to lock in record-low mortgage rates From Inman News

No rush to lock in record-low mortgage rates

Fannie Mae: Purchase-loan demand expected to double in next 2 years
By Inman News
Inman News™

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Rates on 30-year fixed-rate mortgages dropped below 4 percent this week for the first time in history amid increasing global economic concerns, Freddie Mac said in releasing its Primary Mortgage Market Survey.

A separate survey by the Mortgage Bankers Association suggested many homeowners and would-be homeowners are unwilling or unable to take advantage of record low rates, with demand for refinancings and purchase loans both falling last week.

Fannie Mae economists are projecting that mortgage rates will stay well below 5 percent through 2013, and that demand for purchase loans will more than double in the next two years.

Freddie Mac’s survey showed rates on 30-year fixed-rate mortgages averaged 3.94 percent with an average 0.8 point for the week ending Oct. 6, down from 4.01 percent last week and a 2011 high of 5.05 percent in February. Rates on 30-year fixed-rate mortgages have never been lower in Freddie Mac records dating to 1971.

Rates on 15-year fixed-rate mortgages averaged 3.26 percent with an average 0.8 point, down from 3.28 percent last week and a 2011 high of 4.29 percent in February. The 15-year fixed-rate loan, often used by homeowners to refinance, set a new low in records dating to 1991.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loan averaged 2.96 percent with an average 0.6 point, down from 3.02 percent last week and a 2011 high of 3.92 percent. That ties a low, in records dating to 2005, last seen in September.

Rates on one-year Treasury-indexed ARM loans averaged 2.95 percent with an average 0.5 point, up from 2.83 percent last week but down from a 2011 high of 3.4 percent in February. The one-year ARM hit a low in records dating back to 1984 of 2.81 percent during the week ending Sept. 15.

Freddie Mac chief economist Frank Nothaft said interest rates for one-year ARMs rose as the Fed began moving $400 billion currently invested in short-term government bonds into Treasurys with remaining maturities of six years to 30 years, which will help reduce upward pressure on long-term interest rates.

Under a plan dubbed “Operation Twist,” the Fed is also reinvesting principal payments on the $1 trillion the government holds in Fannie Mae and Freddie Mac mortgage-backed securities (MBS) and debt back into agency-backed MBS as those investments mature.

Nothaft noted that Federal Reserve Chairman Ben Bernanke testified before Congress this week that the recovery is close to “faltering” and stressed the need for lawmakers to act.

The Mortgage Bankers Association’s Weekly Mortgage Applications Survey showed demand for purchase loans fell a seasonally adjusted 0.8 percent during the week ending Sept. 30, and was down 12.1 percent from a year ago.

Requests to refinance were down 5.2 percent from the week before, but accounted for nearly eight out of 10 mortgage applications.

In a Sept. 19 forecast, economists at Fannie Mae projected that mortgage purchase loans will total just $394 billion this year, down 16 percent from last year and 33 percent from 2009.

Fannie Mae’s forecast calls for purchase-loan demand to more than double within two years, growing 66 percent next year to $654 billion, and surging again in 2013, to $853 billion.

The mortgage giant’s economists don’t see upward pressure on mortgage rates, projecting that 30-year fixed-rate loans will average 4.2 percent during the final quarter of 2011 and stay there for the first half of 2012.

Fannie Mae’s forecast then calls for a gradual rise in rates for 30-year fixed-rate loans, to 4.4 percent during the final three months of 2012 and an average of 4.6 percent during 2013.

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