To Buy or Not to Buy, that is the question….

I come across this question all of the time, especially in this market. Many people I feel want to take advantage of the market, but they’re just not sure if NOW is the time or not. When is the perfect time to buy? We will only really know that once prices start going back up, then everyone will say “that was the time to do it.” However at that point, it will be too late. The market will have started to recover. There are signs pointing to recovery, but I think there is still a ways to go. Does that mean that buyers should sit back and just wait? I don’t think so. There are too many good incentives to let this market pass you buy.

Will home prices get better? Maybe, but maybe they won’t. If you read my last blog post you could see that home prices in Cincinnati dropped 13% on average when compared to last year. And as I mentioned in that post, as inventory shrinks and more demand is created, prices will start to climb back up. Get the prices now while we KNOW they are low. It’s the law of supply and demand.

Another great incentive are the low mortgage rates we are seeing right now. I don’t think that today’s first time home buyer really appreciates the low rates we’ve got going right now. They will all be in for a shock when they go to sell 5 years from now and may have to pay quite a bit more. Today’s rates, although they fluctuate a lot, they are still historically low, generally between 5-6%. Once everything starts to bounce back you can pretty much kiss these sweet deals good bye…

If you’re a first time home buyer you may want to finally jump on the home buying band wagon. Your 8k tax incentive is up Nov 30, 2009. That means you have to CLOSE by Nov 30. The clock is ticking my friends… who is eligible? Anyone who hasn’t owned a home in the past 3 years if they meet income limits single buyers, $75,000 a year; married couples $150,000. The credit decreases for single buyers earning between $75,000 and $95,000, and between $150,000 and $170,000 for home buyers filing jointly.

Call me today if you have any questions on purchasing a home in Cincinnati! I’d love to help.<-->

It was a week before Christmas and I was as busy as can be. Who says home sales aren’t happening? Sure, things are a little squishy right now - but people are out there and they’re looking.  The problem is, there just isn’t that much out there. 

If you’re looking to sell, you’ve got to:  1. price it right 2. make it look great! 3. Impliment strategic marketing

Questions? Call me!

Here are some stats on November sales:
                                      November Monthly Home Sales
                                 Closings       Gross Volume        Average Price
Nov. 2008            1,168           $168,995,148          $144,688
Nov. 2007            1,593          $261,434,650          $164,115
Variance                -26.68%          -35.36%                    -11.84%

                                                       Year-to-Date Home Sales
                                        Closings         Gross Volume           Average Price
Jan-Nov. 2008           17,469         $2,862,722,303         $163,874
Jan-Nov. 2007          20,906         $3,639,623,639          $174,095
Variance                        -16.44%           -21.35%                          -5.87%

                            30-Year Fixed Rate Mortgage (local)
                               November 2007 (average) 6.44%
                               November 2008 (average) 6.39%
                                    Current (Dec. 22, 2008) 5.08%

I recently received 2 emails from the Ohio Housing Finance Agency (OHFA), letting me know that the Ohio Bond Money Program is raising its rates and also that they are also temporarily discontinuing their downpayment assistance Program.  Both changes are effective immediately.  So what is OHFA??  OHFA helps low- to moderate-income Ohioans purchase new homes, keep their current homes, or find quality, affordable rental housing. They have a variety of programs to deliver qualified buyers.  Is this a good option for you if you’re looking to purchase?  Perhaps, make sure you mention it to your loan officer and let them work some of the numbers and details for you.

This is a simple response to what is happening in the market.  We saw 100% financing leave months ago, the Ameri-dream program dry up the end of last month, and now this.  Its a sign of the times, but I think in the long run it will help buyers realize that buying a home is a BIG investment and that you need to be able to save up some cash in order to invest… 

Here are copies of the emails received:

Subject:  Down Payment Assistance Programs—Temporarily Discontinued

Effective Date:  8:00am    October 13, 2008

 As volatility in the financial market continues, offering a product that meets the needs of first-time homebuyers has become increasingly difficult.  The ability to obtain capital to continue our programs is severely limited. Despite recent rate increases, program volume has continued at a pace that can not be sustained.  It has become evident that down payment assistance, not interest rate, is the primary reason today’s homebuyers select an Ohio Housing Finance Agency (OHFA) mortgage.

 To protect and continue our core First-Time Homebuyer Program, the Agency will temporarily discontinue our down payment assistance programs, effective at 8:00am October 13, 2008.  This announcement applies to both second mortgage loans and down payment assistance grants.  We will honor reservations for loans with down payment assistance made prior to this announcement. 

 OHFA’s mission is to “open the doors to an affordable place to call home” for Ohio families and we are proud to have helped thousands of borrowers through our down payment assistance programs.  It is a difficult decision to suspend these programs, but it is now imperative that we devote increasingly scarce resources effectively. 

Borrowers can still purchase their home using the First-Time Homebuyer program. 

We will continue to evaluate our programs and respond to the market as necessary.  We appreciate your patience as we work to preserve the program that for 25 years has helped thousands of Ohio borrowers purchase their first home. 

Email 2:

 

Dear OHFA Participating Lenders,

Due to the continued turmoil in the financial markets, OHFA must raise
rates for our First Time Home Buyer program.  The tax exempt bond market
is effectively shut down, and it is unclear when it will improve.  We
are pursuing other avenues to access capital, but anticipate higher
costs.

In the mean time we are committed to maintaining a program, while taking
prudent action to slow production. 

Thank you for participating in our program and for helping Ohio families
to become homeowners.

This just in from Sibcy Cline Mortgage.

As some of you may have read in one of my recent posts regarding the future of 100% financing, its true; the days of 100% financing are gone.  However, there are creative mortgage solutions out there.  The most recent were just given to me by our mortgage officer:

Option 1:
FLEX 97 w/3% Gift:
Sale Price = $150,000
Loan Amount = $145,500
Gift = $4,5000
P&I=$849.10 + $116.40 (pmi) = $965.50

Option 2:
OHFA/FHA with a 3% 2nd mortgage
Sale Price = $150,000
Loan Amount = $145,500  Adj = $147,682
2nd - $4,500
P&I=$861.83 1st
$36.94 2nd
$61.53 pmi
= $960.30

Option 3:
FHA/AmeriDream DAP
Sale Price = $150,000
Loan Amount = $145,500  Adj = $147,682
DAP - $4,500
P&I =$861.83 + $61.53 (pmi) = $923.36

As an advocate for not having people be house poor, I want you 100% financers to realize that actually saving for a down payment is going to benefit you greatly in the long run.  If you’re not in a hurry to purchase, start saving now.  Gather 3-5000 down.  You’ll thank me for it later.

If you’re interested in purchasing a home, maybe upgrading from the one you’re presently in, feel free to give me a call.  I’ll give you the straight scoop on what the Cincinnati housing market is doing.

Buyers!  You’ve got to start acting more quickly.  Lock in your rates before they start to creep up!  Don’t miss out!!  Compare to last weeks rates…

Its common misconception that when the feds cut interest rates, mortgage rates will in-turn go down.  But what many people don’t understand is that the Fed can only control the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be in effect for 30-years and a rate that is set by the Fed can change from one day to another.  Another common mistake is in thinking that 30-year Treasury bonds or 10-year Treasury notes are directly pegged to mortgage rates. Those are government securities that are backed by the full faith and credit of the U.S. government and have no direct effect on mortgage rates.

So how ARE mortgage rates calculated?

Fixed-interest mortgage rates are set by markets based on long-term money rates, not short-term rates. If bond investors fear that the Fed is letting inflation get out of control, then long-term rates could rise. Mortgage-backed bonds known as Mortgage Backed Securities (MBS) are bonds issued by Fannie Mae and Freddie Mac (MBS) and the trading performance of those bonds will determine the direction of mortgage rates.

“Mortgage rates are going to be attractive for quite some time,” Bill Hampel, chief economist for Credit Union National Association said, suggesting that the weakness in the economy will keep long-term rates from rising too much.

In turn, no-one knows how long these great rates are going to last.  Home prices are low and rates are low as well.  Why not lock yourself in at a great 30yr fix?  These rates definitely won’t last forever and neither will these home prices.

If you’d like to know more about the Cincinnati housing market or if you’re in the market to purchase a new home, I’d love to talk with you about just that!  Feel free to email/call me anytime.

Federal Reserve chairman Ben Bernake said today that the central bank was proposing new rules to clean up mortgage lending and also aimed at protecting home buyers from potential mortgage fraud. 

“We are meeting today to discuss proposed regulatory amendments to protect consumers from fraud, deception and unfairness in the mortgage market,” Bernake said in a statement.

The proposal includes four key protections for “higher-priced mortgage loans” secured by a consumer’s principal dwelling:

• Creditors would be prohibited from engaging in a pattern or practice of extending credit without considering borrowers’ ability to repay the loan.
• Creditors would be required to verify the income and assets they rely upon in making a loan.
• Prepayment penalties would only be permitted if certain conditions are met, including the condition that no penalty will apply for at least sixty days before any possible payment increase.
• Creditors would have to establish escrow accounts for taxes and insurance.

The rule would define “higher-priced mortgage loan” to capture loans in the subprime market but generally exclude loans in the prime market. A loan would be covered if it is a first-lien mortgage and has an annual percentage rate (APR) that is three percentage points or more above the yield on comparable Treasury notes, or if it is a subordinate-lien mortgage with an APR exceeding the comparable Treasury rate by five points or more.

The following protections would apply to all loans secured by a consumer’s principal dwelling, regardless of the loan’s APR:

• Lenders would be prohibited from compensating mortgage brokers by making payments known as “yield-spread premiums” unless the broker previously entered into a written agreement with the consumer disclosing the broker’s total compensation and other facts. A yield spread premium is the fee paid by a lender to a broker for higher-rate loans. The consumer’s written agreement with the broker must occur before the consumer applies for the loan or pays any fees.
• Creditors and mortgage brokers would be prohibited from coercing a real estate appraiser to misstate a home’s value.
• Companies that service mortgage loans would be prohibited from engaging in certain practices. For example, servicers would be required to credit consumers’ loan payments as of the date of receipt and would have to provide a schedule of fees to a consumer upon request.

The proposed revisions to TILA’s advertising rules require additional information about rates, monthly payments, and other loan features. The amendments also would ban seven deceptive or misleading advertising practices, including representing that a rate or payment is “fixed” when it can change.

The government is stepping in and trying to prevent another “mortgage crisis” from happening again in the future.  And in all honesty they should try to stop predatory lending practices and stop those from trying to buy homes they cannot afford.

Is this a symbol for how bad consumerism has gotten in America?  Are we suffering from “keeping up with the Jones’ syndrome?” 

As far as immediate effects this will have on our market, probably none.  I think everyone right now is sitting tight and waiting to see what will happen in the spring time.

Lets drink our eggnog and open up some presents these next few weeks and forget about our housing woes…

Attention undecided buyers!

Now is even more of a reason to get out there and buy a home.  Check out some of the latest rates:

Rate: 5.75%

Term: 30yr fixed     

Loan Amount:: $100,000 or more   

Type of Financing: Purchase or Rate/Term refi         

Down Payment :  5%

Rate: 5.5%* Loan amount not to exceed $417,000

Why wouldn’t someone want to do it? Plenty of choices out there and great rates!  Hurry act now to lock your rates in.  Call me for a FREE consultation!  I’ll help you find the home of your dreams.