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Monthly Archives: April 2014

Have the bidding wars returned?

While most potential homebuyers would just like to hand in their bid and move into the house of their dreams, they know that the process is not that simple. There is almost always at least one other party interested in the home and who will try to attract the seller with their best offer possible as well.

At the height of the recession, homebuyers had to compete with cash buyers and institutional investors. While the activity of these groups have slowed down, the competition between individual buyers is still strong, according to real estate brokerage firm Redfin.

Rising California home prices don’t slow sales

In many parts of the county, rapidly rising home prices will cause potential buyers to delay their entrance into the market. This doesn’t seem to be the case in California, however, as HousingWire reports that despite the fast increase in home prices, many buyers are still clamoring to move into a home in the Golden State.

Home prices in California currently average $366,000 - up $16,000 from just a month ago. At the same time, home and condominium sales are up 21 percent between February and March. Compared to the same time last year, however, sales are still down 13 percent.

Freddie Mac: Housing market looking better

If you have been wary of entering the housing market due to an unstable economy, now may be the time to purchase a new home, according to Freddie Mac. In a recent blog post, the lender said that the housing market is stronger today than at any point since the Great Recession began.

“After being driven by refinances for more than a decade, the mortgage market in 2014 should experience its first purchase-money dominated year since 2000,” Frank Nothaft, Freddie Mac’s chief economist wrote. “We expect home sales to be up about 3 percent in 2014, new home construction to increase by almost 20 percent, and house-price appreciation to moderate but continue last year’s positive momentum with annual growth of 5 percent in 2014.”

Still Not Gaining Traction After All These Years

The employment numbers for March were reported this past Friday, and they were “okay” at best.

The Bureau of Labor Statistics reports that total payrolls rose 192,000 for the month, which was inline with the consensus estimate. The good news is that gains were realized in the private sector, which created 167,000 new jobs compared to 148,000 in February.  The pace of job creation wasn't able to move the unemployment rate, though, which remains stuck at 6.7%.

FHA program helps former homeowners buy again sooner

When an individual loses their home in a foreclosure or short sale, they must usually wait 36 months before they can purchase another house with a Federal Housing Administration (FHA) fixed-rate mortgage. But the FHA’s new Back to Work Program aims to allow former buyers to get back into a house as soon as 12 months after a loss.

To qualify for the program, which runs through September 30, 2016, applicants will need to identify and document the financial issues that caused the foreclosure in the first place. The buyer will also have to prove to the FHA that they are capable of taking the right steps have to take the steps to re-establish their income and credit.

How to judge a neighborhood

If you’re in the process of buying a home, an important factor to consider is not just the house itself, but its location. The environment of the neighborhood can have a significant impact on a home’s value. You’ll need to do some independent research to determine whether or not a seller’s asking price is really in line with the home’s true value.

Here are a few items you will need to pay attention to:

FHA mortgage insurance rates pushing away borrowers

Many first-time home buyers are drawn to loans backed by the Federal Housing Administration (FHA) because they require lower down payments and have easier-to-meet qualification standards. One catch to these benefits, however, is that borrowers must purchase mortgage insurance provided by the government agency. Although it was once an affordable alternative to private mortgage insurance, FHA premiums may be getting too pricey, according to National Association of Realtors (NAR) President Steve Brown.

In a letter to the FHA, Brown urged the agency to lower its annual mortgage insurance premiums. During the housing crisis, the FHA had to deal with significant losses to its Mutual Mortgage Insurance Fund. To stay afloat, premiums were raised by 2 percent. But now that the economy is recovering, Brown says that the FHA needs to lower premiums and eliminate the requirement that insurance be held for the life of the loan. The stipulation that forces borrowers to keep insurance significantly raises the price of home ownership.

A Federal Reserve World, And We're All Living in It

When the conversation turns to monetary policy and the Federal Reserve, the natural reaction is for eyes to glaze over.  This is understandable. In the past, monetary policy and the Fed were supporting players who impinged little on the day-to-day activity in the housing and mortgage markets.

That's hardly the case today. Over the past few years, since the 2009 recession, the Fed has morphed into a leading player. Therefore, we have no choice but to follow the Fed. “You might not be interested in war, but war is interested in you,” is a quote attributed to Russian revolutionary Leon Trosky. We can modify Trosky's quote to say, “We might not be interested in the Federal Reserve, but the Federal Reserve is interested in us.”

Should you put your tax refund toward a down payment?

Coming up with a large enough down payment is one of the most significant obstacles that would-be buyers face when trying to purchase a home. For many of these people, tax season is the best time of the year because of the refunds that they receive. According to many mortgage professionals, the early months of a year are when many first-time buyers enter the market because they have more cash on hand.

The average tax refund is less than $3,000, so it’s unlikely that it would cover a down payment alone, which starts at $6,000 for FHA loans and quickly climbs into five-digit sums for other financing options. But $3,000 can still go a long way.

Should I consider a first-time homebuyer loan?

Navigating the process of purchasing a home can be difficult for first-time buyers. One of the most challenging parts is understanding all of the financing options. To make the undertaking simpler, the federal government and some states offer special loan programs for first-time home buyers. While these loans have some attractive aspects, they may not be the best option for everyone.

See below for some of the benefits and downsides of your decision.