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Monthly Archives: May 2014

Mortgage rate decline could bolster home sales

Despite a recent slip in both existing and new home sales, experts agree that a decline in mortgage rates could help to stimulate the market. A Standard & Poor’s/Case-Shiller National Home Price Index found that home price annual growth fell from 11.4 percent to 10.3 percent as of March 2014.

"I'm a little puzzled by it, but it isn't a big change. Mortgage rates are down, and that ought to be spurring the market a little bit, but it's not a big change this month," Robert Shiller, co-creator of the index, told CNBC. "The market is still on the up, at least looking at price data. You know, there's always been a lot of momentum in the housing market, and it still looks up and it still looks optimistic."

More parents taking kids into consideration around home buying decisions

The days when parents bought a home and told the kids about it later seem to over, according to a new survey from Coldwell Banker Real Estate. The poll of 2,000 parents found that 79 percent of Millennial parents and 70 percent of Generation X parents make major financial decisions based around their children. The individuals surveyed also said that they are concerned about how a move could affect the emotional well-being of their children.

“Thirty years ago, if a parent had a job opportunity that was positive and was in sync with their job goals, there was a move that was happening, and the kids needed to adjust,” Robi Ludwig, lifestyle correspondent for Coldwell Banker Real Estate told MarketWatch. “We hear stories about bullying in school, and kids being vulnerable,” he added noting that parents don’t want to move too far from a familiar area.

Should you buy a vacant home?

Most potential homebuyers are looking for the best deal. Often this comes in the form of vacant homes. They’re often listed at reduced prices, but with this discount often comes costly issues. Whether or not buying a vacant home will make financial sense for you will depend on a variety of factors, but you will want to take the following points into consideration:

Common mistakes that may ruin your mortgage prospects

The home-buying process can be exhausting. After years of saving followed by many more months of searching, the last thing that you want is to have your mortgage application rejected. Unfortunately, this could happen if you make any of the following mistakes:

Housing prices are rising, but not in all areas

According to the National Association of Realtors’ (NAR) latest Housing Affordability Index, the single-family home price rose 7.4 percent over the past year to $198,200. Despite the increase, however, more that 63 percent of homes sold in the first three months of 2014 were affordable to buyers earning the U.S. median income of $63,900.

In some markets, the minimum income needed to qualify for a home loan was significantly lower than the national median. The cities include:

Tips for winning a bidding war

If you’ve found a home that you love, you may be willing to pay anything to get your hands on it. Unfortunately, many other potential buyers feel the same way. Before you know it, you may find yourself in a bidding war.

Winning a bidding war doesn’t necessarily mean having the most money. Sellers have various motivations for making their final decisions, but here are a few tips that may put you at the top of the list:

Rising FHA fees may shut out potential buyers

Many low-income and first-time homebuyers often pursue mortgages backed by the Federal Housing Administration (FHA) because they are able to make lower down payments. For decades, the government agency has put homeownership within closer reach for many Americans, but this may no longer be the case.

Recent data from the National Association of Realtors (NAR) has found that the FHA has more than doubled its mortgage insurance fees since 2010. All FHA borrowers are required to pay mortgage insurance premiums for the duration of their loans. This is not the case for most other lenders. Currently, these fees average $340 month for most borrowers, which is unaffordable for most people on a limited budget.

Relaxed lending rules may help first-time buyers

While the overall economy has made major strides since the end of the Great Recession, the housing market has been slow to make a turnaround. Some finance experts have said that tightened lending conditions are to blame. In an attempt to prevent a repeat of the mortgage default crisis, the government and lending institutions may have inadvertently shut out many worthy borrowers with limited credit histories.

This problem may be coming to an end, as the Federal Housing Finance Authority (FHFA) recently made a series of announcements that seem to point at the loosening of financing restrictions. At a press event at the Brookings Institution, Mel Watt, the FHFA’s new director said that the government agency would keep current Freddie Mac and Fannie Mae loan limits in place.

The additional costs of buying a home

Many first-time home buyers assume that the only upfront cost of a home purchase is the down payment. While this is certainly the largest sum that will be paid during this period, it is not the only one. During your house hunt you will need to budget for the following additional expenses:

Borrowers have more options for low down payment mortgages

For many would-be borrowers, the upfront costs of buying a home are difficult to afford. First-time buyers often don’t have the 20 percent down payment that they need to qualify for a traditional mortgage.

Fortunately, a growing number of alternatives have emerged that are aimed at helping families with the initial expenses of the home buying process. Many individuals are taking advantage of these programs, as the National Association of Realtors (NAR) reports that 60 percent of first-time buyers put down 6 percent or less of the price of a property.