FHA Cash Out Refinancing Gets Tougher Tomorrow!

If you're in want of a cash out refinance, the most liberal cash-out program in town is about to make qualification more difficult.

Effective tomorrow, April 1, 2009, the FHA is reducing the maximum loan-to-value on cash-out refinances by 10 percent, dropping the loan size limit from 95% of the home's value to 85%.

In its official press release, the FHA says it's making the change to "limit its exposure to undue risk".

It also lists the following cash-out requirements:

• With less than 12 months since the purchase date, a home's value cannot exceed its original purchase price -- even if home improvements were made.


• A homeowner must be current on his mortgage payments to qualify


• A second, verifying appraisal may be necessary, depending on loan traits


• Co-signers may not be added to the mortgage note in order to qualify

The last day to register a FHA 95% cash out refinance is Tuesday, March 31, 2009. The loan does not need to be "locked" -- only registered.

So, if you know that a 95% cash out FHA refinance is in your future, talk to your loan officer today about registration.

More Information That The Housing Market has Reached Bottom

The national housing market got three pieces of good news in 3 days last week:

• Monday: Existing Home Sales up
• Tuesday: Home values appear higher nationally
• Wednesday: New Home Sales up

And although national real estate statistics are irrelevant to the local markets in which real estate transactions happen, to a country of would-be and wanna-be home buyers, repeated positive news on housing can be a strong signal that it's time to get off the sidelines.

At least, that's what the data is showing us. According to an industry trade group, first-time home buyers accounted for half of all sales of previously-owned homes.

The stimulus package's $8,000 tax credit likely played a role in this 50 percent figure, as well as sagging home prices in most markets and low mortgage rates nationwide. In Philadelphia's very affordable market, where price declines have been truly nominal compared to those in many parts of the country, these first time buyers are seeing even more benefit from the program, and our company is seeing many people acting now to take advantage of the incentive.

But lest we carried away, we can't forget that February's New Home Sales is still the second-lowest tally on record and that two months of data doesn't define "turnaround".

On the other hand, if the trend continues through the Spring Buying Season, we'll likely look back at Winter 2009 as the low point in housing. Since it has been my experience that we only recognize the end of any difficult period in retrospect, these indicators gain more significance in my mind.

(Image courtesy: LA Times)

Follow the Bouncing Mortgager Rates

For the fifth time in a year, rate shoppers learned an important lesson this week: When mortgage rates plummet unexpectedly, they often recover just as fast.

Wednesday, the Federal Reserve's newest $750 billion mortgage market pledge helped to push conforming mortgage rates near their lowest levels since WWII.

24 hours later, however, those rates were expired.

After considering the long-term implications of the Federal Reserve -- literally -- printing new money to service the recession, markets grew fearful that the Fed's interventions will eventually lead to inflation. Inflation, of course, is the enemy of mortgage rates.

So, if you're looking for the explanation of why rates rose as suddenly Thursday as they fell the day prior, this is it. And, in hindsight, rate shoppers might have seen it coming, if only because we've seen the exact pattern 4 other times:

1. After the Fed's "surprise" rate cut in January 2008


2. After the Fannie Mae and Freddie Mac takeovers in September 2008


3. After the Fed announced its first $500 in support in November 2008


4. After the Fed zeroed out the Fed Funds Rate in December 2008

Sharp drops in mortgage rate, it seems, are followed by immediate bounce-backs.

Unfortunately, not every would-be refinancing homeowner saw the increase coming. People that locked Wednesday captured the lowest rates in 6 decades. Everyone else wishes they had.

From day-to-day, we don't know if mortgage rates will rise or fall. Nobody knows that. But, we do know that mortgage rates tend to follow patterns and we've seen the above pattern 5 times now.

When mortgage rates plunge like they did Wednesday, they rarely low for long. When you find a rate you like, get in and get locked as soon as possible. By tomorrow, it's likely to be gone.

In a market like ours, where prices are stable with little decline, even in this most difficult of economies, the low interest rate still is the buyer's best friend. And if you buy for solid reasons, even the rate shifts like these don;t impact you really poorly. As always, It remains better to buy real estate and wait than it is to wait and buy real estate!

Flipping - Your Mattress Not your House!

If you're not rotating your mattress every 3 months, you may be shortening its lifespan. Constant nightly pressure can "wear out" the areas on which you sleep, creating in-bed divots and reducing your sleeping comfort.

The ExpertVillage.com video above -- "How To Flip a Mattress" -- is pretty self-explanatory. But there's a few other steps you can take to protect your bed and your health.

First, consider the use of a mattress cover. A mattress cover protects against spills and stains and can stop liquids from dripping inside of the mattress itself. Mattress covers are marked down 43% at Amazon.com right now and can be purchased for cheap at Bed Bath and Beyond, too.

Second, each time you change your sheets, remember to vacuum the mattress surface. A thorough cleaning will reduce the number of allergens and mites living on your bed, promoting better health hygiene.

And lastly, remember to occasionally apply an upholstery-grade cleaner to your mattress for stubborn stains or soilage. Using this particular type of cleaner is important because the product is meant to be near human skin. This is different from, say, carpet cleaner.

A good mattress can be expensive. Extending its usable life is not.

Keeping a Clean Fridge!

Food-borne illness is three times more likely to occur at home than in a commercial kitchen. It's a fact that surprises a lot of people and one that experts attribute to a myriad of blunders including the improper storage of food, lack of cleanliness and unsafe food handling.

As it turns out, keeping your fridge clean and orderly is just a start.

Here's a few other helpful tips:

• Produce for salads often grows low to the ground and, therefore, is exposed to fertilizers. Wash thoroughly before placing in the produce bin.
• Never put washed produce back into its original, contaminated container.
• Even if fruit comes with a "peel", wash it. Whatever's on the outside transfers to the inside when you cut it.
• Keep milk and cold cuts off the refrigerator door -- it's the warmest part of the interior.
• Adhere to expiration and "use by" dates.
• If you see mold on bread, throw out the entire loaf.

Lastly, remember to wash your hands before handling your food. You don't have to be playing in dirt to get your hands dirty. The simple act of typing on a keyboard is enough to spread germs.

Clean food + dirty hands = dirty food.

Source
I love you ... Let's clean out the fridge
Kristen Browning-Blas
Denver Post, February 11, 2009
https://www.denverpost.com/ci_11666028

I'm Stuck Between Two Attorneys!

Today I am in Atlanta for ReTechSouth.

The conference has grown into a pretty substantial event describing itself as;

A place where agents, brokers, lenders, builders and many other real estate industry practitioners could join together to collaborate on how technology can improve business

Sounds pretty good doesn’t it? And I’m very impressed by the people that will be speaking at the conference, Jeff Turner, Ginger Wilcox, Teresa Boardman, Kelley Koehler, Ines Hegedus-Garcia, Todd Carpenter, Joe Ferraro, Rob Hahn, a ton of other great speakers, and (less impressively) me.And, for people that really know their stuff, there is an opportunity to meet the real BoomerJack Boardman. Obviously, the level of information to be passed here is only surpassed by the multitude of awesome social networking rock stars (your author not included).

I’m very excited because I’m moderating the Cage Match of the Century - a ginormous stupendous spectacle of a debate between those two Web 2.0 giants, Joe Ferraro of Sellsius.com fame, and Rob Hahn A.K.A. The Notorious R.O.B. And you dear reader are going to hear about it first right here!

Today on the Main Stage at ReTechsouth, Joe will be the Pasha of Positivity, arguing the Pro stand on every question while Rob (a usually bright pleasant and positive gentleman) will become the raging Ninja of Negativity! Based upon their thorough and exhaustive academic and practical backgrounds, they will enlarge the mind through their exploration of four important questions:

1. Should Agents Blog?
2. Is there a Place in Social Networking for Shameless Self-Promotion and Advertising?
3. Does Size Matter? AKA Your Importance in Social Media is determined by the size of your…. followers
4. Nobody needs a broker!

From the conference calls to set this up and choose our topics, to the emails we have exchanged, colored by my own opinion of these two smart guys, I anticipate a ton of fun and even more information. So if the idea of two attorneys fighting while moderated by a seasoned real estate broker (someone spilled pepper on me this morning) is at all intriguing to you , I hope you’ll be there when we kick it off Friday at 11 AM on the main stage.

The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged yesterday, within the target range of 0.000-0.250 percent. This doesn't mean the Fed stood pat, however.

On plan to resurrect the economy using "all available tools", today, the Fed announced a new, $1.5 trillion round of fiscal support for the treasury and mortgage markets.

The stimulus will likely be this morning's headline story.

In its press release, the FOMC touched upon a few of the prevailing economic issues, using these points as a legitimizing backdrop for its newest debt load:

• Job losses and wealth loss are dragging down consumer spending
• Some U.S. trading partners are falling into recession
• Businesses are cutting back on investment and inventory

Of interest is that the FOMC said today's inflation levels may be too low to support economic growth at all. This condition is more commonly called deflation. The Fed's latest actions, therefore, may be a deliberate attempt to induce inflation through unprecedented borrowing.

For home buyers and potential refinancers, this is terrific news -- at least in the short-term. By introducing new demand for mortgage bonds, the Fed will help pressure mortgage rates lower. Already this afternoon, mortgage rates fell and they will continue to fall until the market reaches a new equlibrium.

After the Fed's last intervention, markets reached their balance point in about a day-and-a-half.

For people who have been indecisive about whether to buy or not now, this is another indicator that the market has reached the optimal time to act.

Source
Parsing the Fed Statement
The Wall Street Journal Online
March 18, 2009
https://online.wsj.com/public/resources/documents/info-fedparse0903.html

DIY and Increase Your Home's Value!

In a tight economy, do-it-yourself home improvements projects not only save money, but may also justify a higher listing price for a soon-to-be home seller. In addition, projects like these make your home "the shiny penny", standing out when buyers are looking through the houses on the market.

In the 4-minute video above, Sweat Equity host Amy Matthews talks with NBC's Matt Lauer about affordable home upgrades that even the least skilled home remodelers can finish on their own.

Three of the huge, bang-for-the-buck projects discussed are:

• Refinish laminate countertops for $95.


• Replace hollow "builders' doors" with sturdy doors for $200 each.


• Install kitchen and bathroom backsplashes for $500 each.

The video also recommends installing a basement egress window, if possible. As far as DIY goes, it's a little bit more complex but the results are stunning.

First Time Investor Video

"Most of the biggest real estate fortunes were not made in good times, but in bad times like this" Barbara Corcoran reminds us in this talk with NBC.

It's important perspective for Americans wondering how to invest in foreclosed properties without losing their cash or their credit rating.

In the 4-minute interview, Corcoran quips on the basics and the essentials of foreclosure investing,

• "Everyone who loses their shirt loses it somewhere else."
• "Every big shark started small."
• "The house on the corner sets the tone for the block."

She also lends some personal perspective to rent rolls, the cost of losing a tenant, and finding a good business partner.

Banks are anxious to sell their foreclosed homes and that makes this an ideal time for shrewd real estate investors. If you're new to the game, watch the video and take good notes.

New Jersey & Pennsylvania Foreclosures Lower than Other States

USA Today ran this 2008 Foreclosures By State heatmap last week, reminding us of a simple truth: Headline statistics can be misleading.

According to data compiled by RealtyTrac, 1 in 8 U.S. homes were in various stages of default or delinquency at the end of 2008. This is a fact and it was widely reported by the press.

However, as the heat map plainly shows, in stripping out just 35 of the nation's 3,232 counties, we can decrease the number of foreclosures nationally by half.

In other words, yes, 1 in 8 U.S. homes face mortgage trouble. In Pennsylvania, the ratio is much, much lower. As you can see from the "heat map" our state is pale blue, as is most of New Jersey, indicating less than 2% foreclosures rather than the 12.5% reported. Real estate is a local phenomenon. National statistics rarely apply, and in our market, stability is much greater than in others.

Choose the Right Filter - Not the Cheapest

Changing your air filters regularly keeps your household energy costs down and extends the life of your HVAC unit(s). It's important, however, to use air filters that actually work.

Walk into any hardware store and you'll see a host of filters at various price points, starting at 99 cents. Before you reach for the cheapest products, though, watch the 1-minute video above.

A mesh filter isn't going to stop most airborne particles.

Because buying the recommended pleated air filters can be expensive, consider purchasing in bulk from a store like Home Depot, or from Amazon. Air filters don't "go bad", you can store your discounted filters until they're ready for use.

Experts recommend changing air filters quarterly at minimum. If your home has shedding pets or is dust-prone, consider changing them monthly. It will not only make the air easier to breathe, but ypou'll find cleaning a little less of a challenge as well!

Simple Real Estate Definitions:FICO

Back in the "Good Old Days" the basis of lending was often the knowledge the local banker had of you and your family and your work history.

As the mortgage business grew , there needed to be a more universal method of determining who to give loans to. Today the basis of most mortgage lending is credit scoring. In general, the higher a person's credit score, the lower his offered mortgage interest rate.

Despite the many credit scoring models in use today, however, just 3 are relevant to American homeowners:

• The Equifax BEACON^® score
• The Experian Fair Isaac Risk Model
• The TransUnion EMPIRICA^®

Generically, these scoring models generate what are commonly known as "FICO" scores.

FICO scores are measurements of probability. The higher a person's credit score, by definition, the less likely a person is to default on his home loan. This is one reason why credit scoring has added importance lately -- mortgage lenders are very careful about what they're lending and to whom.

Notably, minimum FICO thresholds have been added to all types of mortgage loans.

FICO scoring has 5 main components as listed above. Payment history and credit capacity are two of the largest pieces, but a myriad of other factors contribute to a credit score, too. For example, the longer your reported history of managing credit, the more favorably your credit score will respond.

The myFICO.com website does a terrific job with credit education, explaining in plain language the ins-and-out of credit scoring and ways to boost your score. It also makes a free, 20-page PDF available for download.

Whether you're a homeowner or lifetime renter -- consider it required reading. You may be surprised what you can do to make your score better!

Buying a House in Philadelphia becomes a "No Brainer"

Image via Wikipedia

In a recent article , talking bout the national real estate market (a real oxymoron since there is no "nationl" real estate market) the Realty Times staff quoted the National Association Realtors,

Buyer are still hesitating on whether to enter to market, but the National Association of Realtors estimates "the impact of the stimulus package and lower interest rates on the housing market to be about 900,000 additional home sales in 2009 compared to conditions before the stimulus package."

Though the stimulus package makes buying a home attractive everywhere in the country, in a market like ours, the impact for homebuyers is even greater than it may be in areas like Washington DC, Los Angeles, San Diego & Manhattan where the spike in prices was very high, and the price reductions over the past two years have been so large.

In a market like Philadelphia, the impact of the stimulus is even greater. A $250,000 property here can be a pretty nice property. And a buyer using an FHA mortgage with a 3% down payment, essentially recieves their down payment back from the stimulus package $8,000 tax credit. If thy ask the buyer for a 6% seller assist with their closing costs, they can purchase the home with little or no cash out of their pocket. In normal times a pretty good deal. In a market that has seen limited price reductions in the past 2 years (only an average of 3% from the highest point of the real estate boom) it becomes even more attractive. After all that price stability means that your long term financial benefits are pretty much "money in the bank" . Combine our moderate prices with low interest rates, and an attractive deal becomes even more of a no-brainer.

So if you can buy a home, now is the time to do it. If you can't buy a home, now is the time to find out what you need to do so that you will be able to do so soon. Good Luck and Hapy House Hunting.