Now might be the best time to lock in a low mortgage rate

Low interest rates have been gracing the real estate market with their presence for the past year but the word on the street is that they won’t be here much longer.  While mortgage rates aren’t going to skyrocket out of sight, it is doubtful that they will decrease and certain that they will steadily begin to rise.

For those wishing to lock in at below 5%, the time just might be now or never (or at least for a very long time).  This past week, the first week in January, the average 30 year fixed mortgage rate was 5.09%.  The general sentiment among economists is that rates are not going anywhere but up from here.

The strengthening of the economy equals less chance for discounted rates.  If you want to refinance or purchase real estate, now is definitely the best time to do so.

For more information on mortgage rates click here to look at a recent article from CNNMoney.com.

As you can see in the graph below, the median home price for sold homes in the last six months decreased by about $15,000.  While that is a loss of about 12% on the amount the homes sold for, we also have to look at the seasonal pattern of real estate that is depicted in this graph.  During the summer months, homes sold for more than in the winter.  Usually there are more homes on the market in the summer and more people are ready to move then.  So, don’t be discouraged by this downward shift.  As we pay attention over the next few months, as we head into Spring I’m sure those numbers will start to climb once again.

As the deadline for the First-Time homebuyer Tax Credit crept closer, it became a clear priority on the Hill.  An extended and expanded home buyer tax credit is a part of a larger bill that also extends unemployment benefits.  This bill was signed by President Obama on Friday, November 6.

The bill essentially remains intact but has a handful of important changes:

Bartow County Home Sale Trends

As you can see in the chart below, the number of homes for sale has dropped 27% from 1528 in November, 2007 to 1106 in November, 2009.  Although this is a significant decrease due to the current economy, it is also noteworthy that there are still over 1,000 homes for sale in Bartow County today.

Since its inception in 1935, the Federal Housing Administration, or FHA, as it is commonly called, was intended to provide affordable loan programs to homebuyers. These consumers were mainly underserved American families. FHA was created by President Roosevelt. During tough times or otherwise, FHA has always been considered a good financing option for consumers during tough times, especially, FHA historically has been good for Americans and good for our mortgage markets in the USA. Earlier this week HUD Secretary Shaun Donovan testified before the US House of Representatives Committee on Financial Services. He explained how FHA has helped the housing market and the US economy begin recovery. This year alone, more than 75% of FHA’s purchase loans have been first time homebuyers. FHA, he testified, is the leader in helping minorities purchase homes. FHA has always been consumer friendly. For example, in the past, credit scores were not important. The agency was very flexible with a borrower’s credit history. Up until the fall of 2008, down payment could even be financed rendering a borrower’s cash out of pocket to virtually zero in many cases. Based on Secretary Donovan’s testimony, it appears several changes are in the works for FHA. Regrettably, these expected changes won’t be very homebuyer friendly. This is my opinion after 21 years of originating home loans.

At some point in the near future, FHA is expected to reduce the amount of money a seller may contribute to a transaction from 6% to 3%. This means many homebuyers in lower price ranges will not only need a down payment but also will have to pay a significant amount of their transactional costs. So, a homebuyer’s cash investment is going to increase. The current 3.5% down payment is expected to increase, though just how much is not known as yet. FHA is also considering increasing the up front mortgage insurance premium which currently is at 1.75%. By doing so, HUD raises capital in order to protect against future uncertainty in the market. Finally, an increase in minimum credit scores is almost certain. Currently most lenders require a borrower to have a middle score of 620. Before long, that score is most likely going to be 640. So, it appears FHA loans will not go away but will become more stringent for a homebuyer. Good news and bad news.

The wisest and best action for a prospective homebuyer is to prepare properly for buying a home, and that means safeguarding credit and saving money.

Post courtesy of Rena Rogers with Pine State Mortgage Corp.

Real estate appears to be stabilizing across the Country

A recent report shows improvement in real estate across the country.  The well known S&P/Case-Schiller index shows that the 10 city index and the 20 city index a marked improvement in real estate in the majority of cities that it tracks.  What the reports displays are small improvements or minimal devaluation in home values.  Home values are up anywhere from .1% to 3.4% in ten cities. In other areas real estate values have remained flat and in harder hit areas home values are decreasing at significantly lower rates.

While the news is certainly not staggering it is encouraging because it indicates that real estate markets across the Country are leveling out.  Home values are falling less sharply and people are being drawn back into the real estate market.  It is no surprise what is stimulating the market.  Low home values, low interest rates and the First Time Home Buyer Tax Credit have combined to create an ideal buyer’s market.

For more information on the latest info click here for a report from Yahoo real estate.

Making green improvements to your home can be good for the environment and your wallet

On February 17, President Obama signed into law the American Recovery and Reinvestment Tax Act of 2009.  This bill extends and modifies the tax credits for windows, doors, and skylights established in the Energy Policy Act of 2005. Going green can not only improve the environment but can also help the wallet.  If renovations are in store for your home consider making them energy efficient.  There are tax credits for 30% of energy efficient home improvements for amounts of up to $1,500 for improvements to existing homes.  Acceptable projects include:

•    Windows and Doors
•    Insulation
•    Roofs (Metal and Asphalt)
•    HVAC
•    Water Heaters (non-solar)
•    Biomass Stoves

There are also tax credits available for 30% of the project cost, no limit, for existing homes and new construction.  These projects include:

•    Geothermal Heat Pumps
•    Solar Panels
•    Solar Water Heaters
•    Small Wind Energy Systems
•    Fuel Cells

Reducing the carbon footprint for your home has never been more affordable or had such incentive.  Whether you want to change your windows or alter your home’s energy source, making changes to make a difference in our environment can help save you money.

For information on energy efficient tax credits click here or call The Mullinax Team at 770.606.0054.