Local Cincinnati mortgage rates are rising while the rest of the nation’s rates are falling, according to Cincinnati.com. At the end of July the average rate for 30-year fixed loans was 4.54 percent nationally while in Cincinnati the average 30-year rate was 4.76 percent.
The article give no clear reason for the difference in rates, aside from the fact that rates change on a daily basis – even a hourly basis because of a number of market pressures and activities. The most important thing in getting a loan is making sure that you have found a mortgage lender who you trust. I have listed a few lenders in my Cincinnati Mortgage Resources page if you are looking for brokers to contact.
Effective June 1, 2010 Fannie Mae is mandating a number of additional qualifications for each mortgage application. These additional mandates are intended to ensure that the information collected from buyers when they apply for a mortgage are the same as when they go to close. Fannie Mae is requiring lenders to re-verify a number of pieces of buyer data including their credit scores, employment, and making sure the borrowers are not on the ‘un-approved’ list maintained by the General Services Administration.
As a Cincinnati real estate agent I have a responsibility to guide buyers through the application process, ensuring that they provide accurate information on all of the documents. Because the lenders are re-checking the information if any of it changes it could cause the loan to go through another round of underwriting. To protect my buyers I am advising them to work very closely with their lenders to keep their information current.
According to an article in CNN there is an impending housing shortage. The recession has stopped, or delayed new home construction and purchases, but the demand will reemerge when the recovery comes. Unlike in years past, home builder may not be able to meet the demand as quickly.
The home builders have not been purchasing and developing land for building. In addition construction loans are very difficult to obtain, both factors that will delay the launch and completion of new homes. It looks like the home shortage will be most severe in areas already tight on land (New York, San Francisco) and less severe in markets with lots of extra inventory (Miami, Las Vegas).
The recession has had an impact on new home construction in Cincinnati. Homearama 2010 was even relocated out of the suburbs to Northside. A few local builders have gone out of business, and the ones that remain are facing increasing legislation designed to minimize environmental impact. As Cincinnati continues to grow and attract new residents we look to both our city master plans and local builders to create outstanding neighborhoods for our new residents.
Are you relocating to Cincinnati? Call me for information on Cincinnati neighborhoods and housing 513-518-1140.
In a sign of the times, more and more Americans are living in their homes post-foreclosure. An article in RSI media details the growing phenomenon and attributes the situation to the volume of foreclosures that have washed over the banks and the fact that they were not prepared to process them.
But the reality is that this situation has its advantages. The families that stay in the home post-foreclosure tend to keep the utilities on and maintain the property. They keep the A/C running which dehumidifies the house inhibiting mold growth and they winterize the pipes preventing costly leaks. In addition an occupied home is less likely to be vandalized (broken windows, copper theft) than a vacant home.
The backlog is one factor contributing the situation, the second is the volume of foreclosed properties on the market already. ForeclosureRadar says it now takes an average of 229 days for a bank to foreclose on a home in California after sending a notice of default, up from 146 days in August 2008. In addition releasing more cheap inventory into the market will only further diminish the value of the bank;s asset. It pays for the bank to have a family living in the home until a point when the market stabilizes and they can recoup their investment in a sale.
Although the family’s credit now has a foreclosure on it, living rent free has give some people the opportunity to use their mortgage money to pay off other debts, and in some cases even save a little bit of money so that when they move to an apartment or other living situation they have the ability to restart their lives with a small financial cushion.
Applications for primary home mortgages are down to level not seen since May 1997. The Mortgage Bankers Association, the trade group for mortgage bankers, is attributing this to the expiration of the federal tax credit and overall slow economic revival. The data points to the week ending May 14.
To be completely fair, what the tax credit did was encourage people who would have purchased a home in the summer make an earlier decision. The tax credit was an incentive and it front-end-loaded the sales activity in the housing market. As I predicted and explained in our January post the first time home buyer tax credit impacted the real estate market cycle, accelerating sales activity by nearly 2 months!
What I am seeing is that the market in Cincinnati is still active despite the tax credit expiring. Buyer are still looking for homes and some made the decision that in their price point $8,000 was not enough of an incentive to purchase a home they really did not love. I am also working with a lot of buyers who did not qualify for the credit for one reason or another. They still want to buy.
The Tax credit was an economic stimulus measure to create economic activity in the market to boost the economy. It was not a subsidy for home ownership, in my opinion. When people buy homes they need ancillary services like movers, painters, contractors, plumbers, and carpenters. Home sales generate a lot of economic activity outside of the sale and that is what the tax credit was designed to do, I think, and from the numbers it looks like it served its purpose.
A number of my discussions with other real estate agents and clients have focused on the state of the Cincinnati Real Estate market after the $8,000 tax credit. The situation is very postive because there are a number of other factors that are supporting a very active residential real estate market in Cincinnati and elsewhere in the nation.
A recent survey by Better Homes and Gardens found a number of factors weighing on the minds of potential buyers concentrated on the current level of affordability in the market. The research shows that nearly two-thirds (63%) believe it is a “buyer’s market,” more than half (54%) feel that mortgage rates are affordable, and 70 percent indicate that there are affordable homes on the market. The reason that buyers are still buying is that they can afford to buy good properties at lower prices with affordable loans.
I believe that it is this overall affordability that will support the residential market through the next year until the overall economy stabilizes and. As the economy heats up and interest rates rise look for the overall housing prices to rise also. Hopefully they will be in tandem with lower unemployment and increases in wages.
The Federal Government has recently implemented another program designed to assist home owners in financial trouble. The government has already rolled out the Making Homes Affordable Modification Program (HAMP) designed to help homeowners modify their mortgages.
The new Home Affordable Foreclosure Alternatives Program (HAFA) goes one step further. In the case where someone has already had a loan modification and is still not able to pay their modified mortgage. The HAFA program essentially pre-approves participants for ‘short sales’, fast-tracking them to sell their home and settle their debt with their creditors.. The program is efficient because it already uses financial hardship information collected by HAMP.
This program is going to impact the Cincinnati real estate market by helping to shit the home inventory from foreclosures to short-sales, The larger impact could be a stabilizing effect on local home prices. While short sales tend to sell below market, they tend to sell for higher amounts than foreclosures. Below are some details on the HAFA program. For more visit the article posted on Realtor.com.
* Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds and acceptable closing costs).
* Requires borrowers to be fully released from future liability for the first mortgage debt and, if the subordinate lien holders receive an incentive under HAFA, those debts as well (no cash contribution, promissory note, or deficiency judgment is allowed).
* Provides financial incentives: $3,000 for borrower relocation assistance; $1,500 for mortgage servicers to cover administrative and processing costs; and up to a $2,000 match for mortgage investors for allowing a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders (up to 6 percent of the remaining balance of each junior lien).
* Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.
The program sunsets on December 31, 2012.
At the end of April the EPA issued new regulations for contractors who work in homes built before 1978. Before 1978 paint was made with lead as a base ingredient, and therefore the EPA has issued a mandate that all contractors receive proper training on how to safely work in homes that may have Lead based paint in them.
If you have been thinking about doing a bathroom renovation, or possibly have dreams of a new kitchen it is important for you to now make sure that your contractor is certified by the EPA to work in an environment with Lead based paint. The contractor must take a course and pass an exam to be certified, or be supervised by someone who is certified in order to do the work.
In real estate transactions bank underwriters are requiring bids come from EPA certified contractors before they will approve home loans. Currently the contractors I work with are all signing up for the EPA course, but it will take time for all of the local Cincinnati contractors to get this certification. This is slowing down a number of the transactions that are in process thanks to the tax credit.
The best advice I have for my clients is to be patient. The contracting, real estate, and lending communities are all aware of the regulations and we are all cooperating to serve our clients as best we can. Please watch the video above for more information about the EPA rules and how it is designed to protect you.
Par of purchasing a home is understanding its energy use. As a practice I research the utility bills of all the homes I list and sell. However the utility bills tells you about the energy and water being used, but to understand how efficient a home is you need an energy audit. Duke Energy provides a free energy audit, or you can contact a company that performs independent audits.
There is also a mortgage product on the market that allows home buyers to roll the cost of purchasing energy saving items into their mortgage. Examples include new furnaces, hot water heaters, and insulation. All of these costs can be financed into the mortgage amount so there is no out of pocket expense and the difference in the mortgage may be offset by the energy savings.
If you want more information on the Energy Improvement Mortgage follow the link to the article.
When an investment corporation defaults, or walks away, from a property it is called a strategic default. When a home owner can no longer afford their mortgage they foreclose. Somehow there has been tremendous stigma placed on the homeowner that has to go into foreclosure, while large corporations face defaults with indifference. The Huffington Post and NPR Marketplace both look at the issue:
A group led by Tishman Speyer Properties gave up the 56-building, 11,232-unit Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan, turning the properties over to its creditors after defaulting on some $4.4 billion in debt. Wall Street Journal. The $5.4 billion acquisition in 2006 was the single biggest residential property purchase in U.S. history. It’s now worth an estimated $1.8 billion.
“We basically walked away from it,” said Clark McKinley, a spokesman for the California Public Employees’ Retirement System [CalPERS], one of several investors in the venture, wrote off its $500 million investment, McKinley said. “It’s underwater, anyway, so we’ve lost it,” he added. “We took our medicine, and we’re learning from it.”
Sadly lenders are fighting the stay off a mass of foreclosures. If homeowners start walking away from their mortgages en masse, there’s little doubt the housing market will collapse and take the economy with it. The New York Times has a list of proposals to help home owners reduce their principals. What is critical is that we need to reestablish stability in the market to prevent a second wave of the housing crisis.
