Fewer Delinquencies as Bad Loans Fade Away

 

 

 

Delinquencies are dropping as bad boom loans fade away.  Fewer problem loans are being made and declining levels of negative equity along with shrinking inventories of bad loans from the boom era are contributing to the the reduction in mortgage delinquencies by the largest decline since 2002.

 

According to the May mortgage monitor report from Lender Processing Services, the national delinquency rate continued to fall in May and is down 15 percent since the end of December 2012.

 

Senior VP Herb Blecher at LPS explains that much of this improvement is supported by the fact that new problem loan rates are approaching the pre-crisis average.  Although they are still approximately 1.4 times what they were, on average during the 1995-2005 period, delinquencies have come down significantly from their January 2010 peak.  Blecher goes on to say that fewer problem loans are coming into the system and the existing inventories are working their way through the pipeline.

 

Yes, The market is finally turning around,  but it is important to take the time necessary to plan your home purchase and to keep an eye on interest rates.  

 

Rates have increased recently and the general consensus is that they will continue to do so.   It may be worth it to pay a little more for the property you have your eye on than wait another month or so and possibly pay a higher interest rate.  

 

The rise in interest rates will affect your monthly payment.  Check with your lender to see how this might change the pre-approval letter that you may already have.

 

Nancy Puder is the real estate owner and broker of Signature Properties, in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 She always enjoys hearing from you!

 

 

 

 

First-time buyers shut out of the market?

 

You may have heard the new term "Gen Rent,” referring to would-be buyers in their 20s and 30s who have been priced out of the housing market.  While this age group is still forming households and would prefer to buy, the lack of supply is preventing them from being able to purchase.  That shortage of inventory along with rising interest rates, makes it harder to qualify for a loan.

 

Another challenge today for the first time homebuyer is the emergence of cash buyers.  Cash buyers who opt to pay cash instead of getting a loan, are snatching up the best buys on the market and the buyer who requires financing cannot compete.

 

First-time buyers will be challenged even further when the Fed decides to stop buying bonds in order to keep rates artificially low. Federal Reserve Chairman Ben Bernanke has said that if the economy keeps growing and unemployment falls, the Fed will begin “tapering” its bond purchases this year, and could wrap them up altogether next year.

 

In the meanwhile, home prices continue to gradually rise. According to the chief economist of the California Association of Realtors, Leslie Appleton-Young, the median home price will increase from $319,300 in 2012 to $354,800 in 2013 (an 11.1 percent increase). 

 

My advice to first time homebuyers is to save as much cash for your down payment as you can.  Seller's feel more secure when the buyer is coming in with more cash down.  Don't give up.  You may have to make offers on several homes before you find a seller who is willing to work with you instead of a cash buyer.  The good news is that this does still happen.  

 

Stay in close touch with your lender to be sure that you still qualify because of the rise in interest rates.  Your payment could be affected substantially from what you thought it would be when you first started looking. And remember, it is not always the best answer to get the highest loan you can qualify for.  Be sure to allow for and set aside emergency funds in case you need them!

 

Nancy Puder is a real estate broker in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 She always enjoys hearing from you!

Short Term Mortgages Become Popular

Lenders are reporting lately that up to 28% of their refinance business involves shorter term mortgages.  Among people refinancing 30-year mortgages, nearly one-third switched to shorter term replacement loans.

 

Some community banks say they are surprised that 10-year mortgages, once an insignificant niche option, are accounting for increasingly large chunks of their business.

 

Though 15-year mortgages have been popular for years among homeowners who want to pay off their balances quickly, lenders say the 10-year loan — targeted directly at the demographic tsunami of baby boomers who are still employed but planning to retire in the coming decade — is on the upswing.

 

"There's a lot of interest in this [10-year] product," said Victoria Stumpf, a loan officer with Third Federal Savings and Loan in Cleveland.

 

Why the growing attraction to going short? Start with interest rates.  With an almost certain increase in rates on the horizon, the average 10-year fixed rate mortgage goes for 3% with a fifth of a point cost (point equals 1% of the loan amount).  Some community banks and smaller lenders quote even lower than that.

 

For community lending institutions such as these around the country, 10-year loans tend to be portfolio investments. Rather than selling the mortgages to Freddie Mac, Fannie Mae or other investors, lenders retain them in-house. Partially as a result, rates can be lower. And since lenders who specialize in 10-year mortgages want to keep risks as low as possible on their in-house investments, they typically require borrowers to have solid credit histories and significant equity or down payments.

 

•Monthly payments. Here's where the shorter term and faster payoff of principal available through the 10-year mortgage can be a budget issue for some borrowers. The monthly total for principal and interest on the 30-year loan is just $715. On the 15-year it's $1,054. But on the 10-year it's nearly double what you'd pay on the 30-year — $1,406. Though over the term of the loan you pay substantially less in total interest charges, on a monthly basis the 10-year requires the most out of pocket of the three.

 

The bottom line is that if you are looking ahead, can afford to pay the higher monthly payment, you can pay your home off completely in 10 years!  Imagine being owning your home outright in this relatively short period of time!

 

I recommend that you speak to your lender regarding a shorter mortgage period when purchasing your next home or applying for a refinance.  Knowledge is power and it could be the right choice for you.

 

Nancy Puder is a real estate broker in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 She always enjoys hearing from you!

 

 

 

BUYING VS. RENTING

Almost $1M Homes Return to Positive Equity

During the first quarter of 2013, approximately 850,000 more homes have regained positive equity according to Core Logic.  This is exciting news for homeowners across the country and an incentive to buyers who have been waiting to purchase.

 

Reportedly, we now have 39 million homes with positive equity and the negative equity burden is continuing to recede across the country due to rising home prices.  

 

Before we get too excited, we need to understand that the housing recovery is still far below when home prices peaked, but tight housing supply in many areas coupled with continued demand for single family homes should help close the gap.

 

Meanwhile nearly 97 million or about 20% of homes with mortgages were still reported with negative equity.  This figure is drastically down, however, and borrowers have good reason to feel hopeful that their equity will return before too long.

 

Nevada shows the highest percentage of mortgaged properties with negative equity at 45.4%, followed closely by Florida and Michigan.

 

Home prices in our area on the Central Coast of California are moderately rising resulting in some bidding wars on the most competitively priced properties.  

 

The cost of renting vs. buying now is about the same which is fueling an enormous increase of activity in the lower price levels.

 

Nancy Puder is a Real Estate Broker in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 She always enjoys hearing from you!

Home Warranties Benefit Buyers and Sellers

Whether you're buying or selling a home, a home warranty is an excellent investment. If you're selling a home, the last thing you want to do is spend a lot of money, if a system or appliance stops working. And if you're buying a home or you already own your home, it's nice to know that you are protected from expensive repair and replacement costs.

 

Whether you are a buyer or seller you'll appreciate the numerous benefits and conveniences that you get from a home warranty.

 

Benefits for Sellers

• Most buyers will ask for a warranty anyway.  Most sellers aren't aware that they can include seller coverage during the listing period also and is often free.

• Attract more first-time home buyers. Provide peace of mind for buyers who might be intimidated by the high cost of repairing or replacing systems or appliances.

• No after-sale worries. If a breakdown happens after closing, the buyer will turn to the warranty for help in most cases.

 

Benefits for Buyers

• Save money and protect your budget. Rather than paying hundreds or thousands of dollars to repair or replace an appliance or home system, you'll pay a standard deductible per service call, per trade, on covered components.

• Most warranty companies will repair or replace covered systems and appliances no matter the age, make or model. Plus, there are no home square footage restrictions and no inspection required.

• Most warranties are renewable and for a few hundred dollars per year, you can continue your coverage.

 

Nancy Puder is a well-known real estate broker in Arroyo Grande.  You may contact her at Nancy@NancyPuder.com or call (805)710-2415.  She always enjoys hearing from you!

 

 

Top 10 Reasons to be Optimistic About Real Estate...

There are many indicators that the housing market is well on the road to recovery.  Here are 10 top reasons to be optimistic!

 

1. Home prices are going up

 

2. More new households are being formed

 

3. Foreclosures are way down

 

4. Interest rates are predicted to remain low

 

5. Demands for home loans are increasing

 

6. More Americans agree that this is a good time to sell

 

7. The number of improving housing markets is going up

 

8. Builder confidence is up resulting in more housing starts

 

9. As housing prices go up, people are getting their equity back and so fewer people are "underwater" with their mortgages

 

10. Real Estate is contributing to the overall economic recovery

 

If I can help you sort through your individual situation, please let me know.  I always enjoy hearing from you! 

 

Nancy Puder is the owner and broker of Signature Properties located in Arroyo Grande, CA. You may reach her at (805)710-2415 or nancy@nancypuder.com