Home Loan Focus

Archive for the ‘real estate’ Category

Government bailouts are making it possible for people to sell their homes and make 20 – 50% more on the price than what the market is offering.  For many people this can help them get out from underwater on their mortgages.  The federal bailout of banks is making this possible.  In some cases people are even able to unload their homes at prices not seen since before the real estate bubble.

That might be welcome news to people witnessing a rate of existing home sales that just dropped in January nationwide.  It might also be welcome news because existing home sales prices dropped in January from from $199,800 in January 08 to $170,300 in January 09 (down from $175,700 in December 08 the month before).

So how might those people sell their home at $199,800 or even $210,000 instead of taking in $170,300? 

What’s the Catch????

They have to sell their home back to the bank. Its called foreclosure. 

For a person that paid $240,000 for a home in 07, and financed $210,000 through the bank only to watch their home go under water when the market price dropped to $170,300 last month, they may have no other choice.

If they happen to be lucky enough to still have a job but are being relocated, they may not be able to afford to pay out $40,300 to pay off their mortgage, even if they can find a REAL buyer that will pay $170,300 for their home.  Not to mention the $13,000 in realtor fees, and $4k in closing costs.

Just giving their house back to the bank (that is getting bailed out by the government with billions of dollars) may be their only option.

Sure Barack Obama’s plan might enable them to refinance at 2% a month and shave $8k off their mortgage principal, but that still leaves them underwater by more than $32k on a house they have to move away from just to keep their job!

The government has engineered a market where the best option for homeowners is foreclosure.  That’s not hope you can believe in, that’s a nightmare come true.

The US Home Price Index as computed by S&P/Case-Shiller® dropped by 18.2% in the fourth quarter of 2008 as compared to the level of the market in the 4th quarter of 2007.  This reflected a drop of 26.7% since the peak of the real estate market in the second quarter of 2006.

The sharpest declines from the previous year were in Phoenix (down 34%), Las Vegas (down 33%), San Francisco (down 31%), Miami (down 29%) and Los Angeles, which includes Orange County, (down 26%).

Las Vegas, Phoenix, Miami and San Francisco home prices were down more than 40% from their market peaks, which occurred at different times. Los Angeles-area home prices ended 2008 down 37% from their late 2006 peak.

"Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines," said David M. Blitzer, chairman of the index committee at Standard & Poors.

U.S. home prices continue record slide – Los Angeles Times

Considering buying a new home in the near future? Do you have children and want to know how the local school districts rate? I found a great site last weekend when I was viewing homes in the south Austin, TX area called SchoolMatters.com. All you have to do is select a state, choose a town and hit search. The site will then provide a detailed list of schools and how their districts rate compared to others in the region. The website also offers a number of reviews from local parents and teachers alike. Whether you are looking for Lake Travis real estate or real estate in Austin Texas, you should definitely check out this site.

In addition to Austin real estate, School Matters offers many testimonials as well as detailed information from all across America. If you have children and are considering buying a new home, it is important to know that they will not only have a great roof over their heads, but a great opportunity to succeed when they are no longer under that roof. 

For many people in the corporate world, at some point or another your company is going to ask you to relocate somewhere around the country and offer to foot the bill. This may sound like a great deal because they’re offering to pay for you to move, but the reality is there are thousands of dollars of hidden expenses involved in this process.

When your company offers you a chance to move, you need to make sure that they’re also offering you a major payraise. If you’re not going to see a payraise of at least $15-$20000, odds are this move is going to take many years to pay off or for you to at least break even. I realize were going through a recession right now and so many people will be tempted to take what they can get and keep what they have, but with inflation increasing you definitely don’t want to move across the country for the same amount money that you received today.

You have to also watch out for all of those third-party contract companies that are there to assist you with your move. They are probably working on a very cozy contract with your company and they don’t necessarily have your best interests in mind and maybe not even the best interest of your company. Even though your company is paying for some of their services make sure that you give them a critical look at every decision they make on your behalf. They might offer to put you in corporate housing for a month for example, charging your company $4000 a month for your rent. That’s a lot of money and if you don’t get out of corporate housing on time you may have to pay that $4000 a month rent bill. So before you move in a corporate housing make sure you can get out on time!

You have to be careful when it comes to storing your stuff as well. Your company might offer to store your valuable possessions for that month while you’re in corporate housing. However if you are unable to close a deal on a house for example within 30 days you could be stuck paying the bill for corporate housing as well is paying the bill for additional storage of your stuff.

So where possible don’t sell your original house until the last minute if you can. Keep your stuff in a place where it’s cheaper free as long as you can. You might even consider trying to avoid corporate housing even if you have to pay the bill. It might not be bad for a week or two while your house hunting, try and stay away from it as long as possible.

Consider also that your company is footing the bill and that money is coming out of their budget. If your bonuses tied to the budget of the new department that you’re moving to and you are inflating the cost of that department your chances of receiving a bonus which could be worth a lot more than a couple thousand dollars could be jeopardized by your own actions.

There are many other areas where relocations can cost you some serious money so make sure you keep a critical eye open to everything that’s going on and try not to get rushed in your decisions while you’re moving. Sometimes the best move is not to move at all.  You might be better off looking for a different job, even one that pays slightly less in the location you live in now.  A move can cost you a great deal of money in the first few years following the move.  Taking a couple thousand dollar pay cut with the option of staying put, could actually enable you to move financially ahead.  Then you can use some of that money that you saved from staying put, to take the family on a couple Disney cruises or invest some money in solar panels for the house or a better telecommuting setup so that next time around, you will be prepared to not move and to work from home permanently!

HSBC Finance is increasing the length of time that it gives homeowners with HSBC mortgages to get reorganized and get their debts back in balance.  That is in part because like many home owners, HSBC Finance can’t sell homes (even after foreclosure at foreclosure prices!) much better than your average home owners.

HSBC Finance, which typically holds its mortgages on its books, ended 2007 with 9,627 foreclosed properties, up from 8,809 at the end of the third quarter, company records show. While the average number of days to sell a foreclosed property has dipped from 186 to 183

Developments : HSBC’s Mortgage Modification Methods

People are staying in their existing home or more often opting for rental possibilities.  Many people still have the ability to pay monthly rates, and if the banks won’t given them credit, they would just as soon rent a place and get back to their jobs and life in general.  Why waist time trying to convince a mortgage broker that your credit can make the grade when your credit situation and income haven’t changed, but the metric for good credit and bad credit has changed.  Renters can resume their lives and spend all that extra time and money picking up good flight deals and traveling a bit while the mortgage industry sorts out its self made problems.

Almost no state is immune from the drop in home prices that is sweeping back and forth across the United States where in the first quarter home prices in total dropped 3.1 % in the first quarter and 0.45% in the 4th quarter of 2007.  The price drops have swept the country from Boca Raton to San Diego to Las Vegas to Corpus Christi real estate and back again.

Prices fell in 43 states, with California and Nevada showing the biggest declines. Home prices dropped by more than 8 percent in those states.

Home Prices Drop Most in 17 Years – washingtonpost.com

Let’s get the bad news out of the way.  Since April 2007, home values as measured by average selling prices have dropped 3.7 percent.  It was actually 3.1 percent for the last 12 months but if you go back another 30-45 days the decrease added another 0.6 percent.

U.S. home prices fell a record 1.7 percent in the first quarter and the number of workers on jobless benefit rolls held at a four-year high, underscoring the economy’s woes, data on Thursday showed.

The continued slump in housing prices in the first quarter pushed them 3.1 percent below their year-ago level, the Office of Federal Housing Enterprise Oversight said. Like the quarter-to-quarter drop, the decline was the biggest in the 17 years the housing regulator has tracked the data.

Reuters

That was the bad news, the good news was hard to find.  30 year fixed mortgage rates did continue to dip a little bit, even as ARM rates increased.  As kids get out of school for the summer, people that might have wanted to move this summer are going to find themselves stuck living where they are and possibly skipping vacations too.  That trip to Disney World and a new house might be replaced with a barbecue in the back yard around new hundred dollar swing sets from Wal-Mart.

That is the perception by some recent surveys.  Home prices declines could accelerate just like stock price declines accelerate during a crisis.

Prices in areas such as Las Vegas and Miami dropped more than 20 percent, while Charlotte, NC alone stood out with an increase in the top 20 US cities in the survey.  But living here in Charlotte, it would appear to me that even the Charlotte hold out is a bit of a fluke.  The numbers for Charlotte a month after the survey seemed to indicate that Charlottes hold out increase was more about a delay in change and a slower moving bubble.

That said, this survey and the new idea that home prices could drop this fast is bad news for mortgages.  If a property considered ‘real property’ does not have ‘real stable’ value, then as an asset it can not necessarily back itself.  That means that the risks that banks take on real estate is actually higher.  Higher risk always translates into higher interest rates.  That means higher buying prices, slower sales rates and slower demand, which also drives down home prices even more. We are looking at a situations that is almost like hyperdeflation.  In the past the Federal Reserve has always tried to put a corset on inflation, but in this situation we almost need a tourniquet on deflation.

So I’m here in Laughlin Nevada which saw massive price inflation during the run up of the real estate market.  Home prices went up 200% from 2003 to 2005, but since 2005 they have dropped 50%.

That’s a heck of a roller coaster (or river raft ride).  That like Oprah’s weight when someone replaces her diet pills with placebos every other month.

People that bought homes before 2005 are doing fine, but people that bought homes after are hurting and lost their shirts in the desert.

If you think you’re about ready to purchase your next home or even your first home, maybe you have looked around for a real estate brokers and maybe you have even done some preliminary things to check on your finances.  Have you considered searching for an eco-broker, someone to help you find an energy-efficient home that will save you money on your gas water electric bills maybe even on your commute?

Real estate brokers are just starting to turn on to a new concept known as the eco-broker so that they might help to strengthen their own franchise in real estate.  In eco-broker is a real estate broker that specializes in helping clients buy or sell homes that are eco-friendly.

Now an eco-broker may not be for everybody, but with oil prices remaining over $100 a barrel in gas prices push you towards for five dollars a gallon and inflation just around the corner it may not be such a bad idea to minimize the amount of money that you have to pay on energy costs with your future home.  People purchasing very large houses of 2, 3, 4, or even 5000 ft.² will also have a great deal of space to manage permanent energy perspective.

From the cost of million dollars in covers three or 4000 ft.², paying a premium to save $1000 a month on energy loss could well be worth it.  Having the peace of mind to understand that your home is as good as it can possibly be and as efficient as it can possibly be when it comes to energy costs may be the prime here.