Buyers Category
More Good News For Knoxville Home Buyers : There is Mortgage Money Out There For You
February 7th, 2009 categories: Buyers, Market Trends
If the unfreezing of credit is paramount to an economic rebound, the first signs of a thaw may be here.
Monday, the Federal Reserve released its quarterly survey of 84 member banks. In it, the Fed says that fewer than half of its responding banks tightened “prime” mortgage guidelines over the last 3 months.
This is good news for active home buyers and other Americans in want of a new mortgage.
“Prime” is a vague term with respect to home loans, but it usually refers to mortgage applicants who can document:
- Equity or downpayment in a home
- Credit scores over 740
- Excessive income versus debt
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Low Interest Rates Make Knoxville Homes More Affordable For Buyers
February 5th, 2009 categories: Buyers, Market Trends
Comparing July’s conforming mortgage rates to today’s average rates, there’s a 1.5 percent difference in favor of homeowners.
Rate drops like that make big differences in a household budget. Look at these before-and-after payments, based on rates from the chart:
$150,000 mortgage ($144 savings/month)
- July 2008: $958 monthly
- February 2009: $814 monthly
$250,000 mortgage ($240 savings/month)
- July 2008: $1,597 monthly
- February 2009: $1,357 monthly
$350,000 mortgage ($335 savings/month)
- July 2008: $2,235 monthly
- February 2009: $1,900 monthly
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Home Buyers Are Out In Full Force Buying Knoxville Homes
February 4th, 2009 categories: Buyers, Market Trends, Sellers
A real estate trade group reported Tuesday that Pending Home Sales ticked higher in December 2008. A “pending home sale” is a home under contract to sell, but not yet closed.
The group positions Pending Home Sales report as a predictor of future activity, suggesting that home sales will spike 60 days hence.
This is good news for the economy.
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New Homes in Farragut
February 3rd, 2009 categories: Buyers
Great New Home at Bargain Price!!
This home is located at 11705 Autumn Glade which is in Farragut off Grigsby Chapel to Fretz to Chapel Glen. Chapel Glen is part of the Rhodes Communities These quality homes are being built by Mike Rhodes and John Kerr Read the rest of this entry »
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Explaining What The Federal Reserve Did In Plain English (January 28, 2009 Edition)
January 28th, 2009 categories: Buyers
The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today. It remains within a target range of 0.000-0.250 percent.
In its press release, the FOMC reiterated most of the key points from its December 2008 statement, including:
- The U.S. employment outlook continues to deteriorate
- Consumers and businesses continue to cut spending
- The housing sector is still showing weakness
In addition, the FOMC addressed the “extremely tight” credit conditions for U.S. households and business, even as it said some financial markets are showing signs of improvement.
To the Fed, the latter is a precursor for the former. For Americans needing new mortgages or other forms of credit, it may mean that getting approved gets easier sometime late this year.
Most importantly, the Fed’s press release again mentioned the policy-setting group’s intention to “employ all available tools” to promote economic growth. This includes the open-market purchasing of mortgage-backed debt that has helped fuel the current Refi Boom. The Fed indicated a willingness to extend the program beyond the initial $500 billion, if necessary.
For each of the Fed’s interventions, though, there is a trade-off.
Buying securities costs money and the Fed — literally — comes up with the cash by printing it. The extra supplies devalue the U.S. dollar which, if left unchecked, can cause the Fed’s plan to backfire in the form of runaway money supply-led inflation. The Fed is aware of this risk and is pledged to monitoring it closely.
Overall, mortgage rates worsened today after the Fed’s statement.
Source
Parsing the Fed Statement
The Wall Street Journal Online
January 28, 2009
http://online.wsj.com/internal/mdc/info-fedparse0928.html
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How Today’s Federal Reserve Meeting Could Change Home Affordability
January 28th, 2009 categories: Buyers
The Federal Open Market Committee adjourns from its 2-day meeting today.
The monetary policy-setting group is expected leave the Fed Funds Rate within its current target range of 0.00-0.250 percent.
This is the lowest range for the Fed Funds Rate in history and, frankly, there isn’t much room left to go lower. Therefore, markets aren’t really concerned about what happens to the benchmark lending rate today.
Instead, markets will focus on the Fed’s ideas to revive the U.S. economy.
In its post-FOMC press release last month, the Federal Reserve pledged to “employ all available tools” to get the economy moving in the right direction. At the time, some of those tools were already in play, including making direct loans to large companies and buying bad debts from commercial bank balance sheets.
And since that meeting, the Fed has put its money where its press release is.
Early this year, the Fed started a program to buy $500 billion in mortgage-backed debt and those ongoing purchases are part of what’s keeping mortgage rates relatively low. The Fed has since made it easier for member banks to borrow money, too.
Each of these steps is meant to pour gas into the U.S. economic engine and the Fed is pledged to keep trying new approached until something works. And this is what mortgage markets will be concerned with today.
If the Fed’s next stimulus plan is deemed ineffective or too costly for its own good, mortgage markets will likely sell off, causing mortgage rates to rise and making housing payments more expensive. The jump could be somewhat sudden because Fed announcements are often met with emotional, knee-jerk reactions.
By contrast, if the Fed’s next steps are deemed on target, expect mortgage rates to fall only slightly. To some extent, this outcome is already priced into rates as of this morning.
The FOMC’s official press release hits at 2:15 PM ET.
(Image courtesy: The New York Times)
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Move-Up Homebuyers Face New Lending Challenges This Spring
January 23rd, 2009 categories: Buyers, Market Trends, Sellers
When a homeowner sells his home and decides to buy a new one, there are 3 basic options for the residence — sell it, keep it, or rent it.
Unfortunately, no matter which path they choose, move-up homebuyers in need of a new conforming mortgage will find qualifying for a home loan to be more difficult this season than in the past.
Mortgage guidelines are dramatically tighter for people “carrying two mortgages”.
Among the changes this spring’s buyers face:
Selling the primary residence
If you plan to close on your new home prior to the closing of your existing home — even if it’s only by a day – both payments must be listed as monthly debts on your mortgage application. This will disqualify the majority of homebuyers.
Converting your residence to a second home
If your current home has less than 30 percent equity in it, your mortgage application for the new home will not be approved unless you can show 6 months worth of mortgage payments + taxes + insurance in reserves for the current home and new home combined.
Converting your residence to an investment property
If your current home has less than 30 percent equity in it, any rental income derived from a tenant is disallowed on your mortgage application for the new home. You must still count the mortgage payment + taxes + insurance as a monthly debt.
In other words, being a move-up buyer isn’t as simple as it used to be. New lending rules make buying a new home an exercise in timing and financial planning. And the rules are expected to get tougher, too.
Therefore, if you expect to be a move-up buyer in the next 12 months, consider moving up your timeframe or — at least — planning ahead for it.
Understanding the new mortgage landscape and how they can influence your upcoming purchase may be the difference between getting approved for a home loan, and getting turned down.
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Could Mortgage Rates Have Already Bottomed Out?
January 22nd, 2009 categories: Buyers, Market Trends
After improving through 11 straight weeks, mortgage rates finally ticked higher last week. This, according to Freddie Mac’s weekly mortgage rate survey. The Freddie Mac survey showed that mandatory mortgage fees rose last week, too.
Unfortunately, the bad news for rate shoppers doesn’t stop there.
Because Freddie Mac’s rate survey is conducted on Tuesday but its reports aren’t released until Thursday, the published data doesn’t even account for the previous 48 hours of activity in which rates and fees have risen further.
Versus last week, 30-year fixed, conforming mortgage rates are up 0.16% on average nationwide. On a $200,000 home loan, this equates to a roughly $20 extra per month, or $7,055 over the life of a 30-year loan.
The Era of Low Rates may not be over, but it may be time to get off the fence.
(Image courtesy: Freddie Mac)
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Mortgage Rates Are Falling But Loans Require More “Points”
January 16th, 2009 categories: Buyers
Another week, another headline screams how mortgage rates have falled to an all-time low.
Freddie Mac published its weekly mortgage rate survey Thursday and found that the “average” mortgage rate is now 4.96 percent, the lowest since the survey started in 1971.
But, if we look beyond the headline, we find that there’s another part of the story worth watching. Mortgage rates are falling but the number of points required to lock those rates is not.
Lenders now require an average payment of 0.7 points to get the 4.96 percent rate from the headlines. That’s up from 0.6 percent last week and 0.4 percent a year ago.
A “point” is a fee equal to 1 percent of the loan size.
Therefore, to get access to a 4.96 percent interest rate on a $200,000 home loan, today’s lender would require an extra $200 versus last week and $600 versus last year. Today’s mortgage borrower would be subject to a $1,400 closing cost in addition to the “typical” closing costs accompanying a purchase or refinance.
This is a period of historically low rates — there’s no doubt about that. However, the cost of getting access to low rates is increasing. The press doesn’t always tell that part of the story and it’s one more reason to look deeper than the headlines.
(Image courtesy: The Wall Street Journal)
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How The Right Amount Of Economic Weakness Can Help A Home Buyer
January 15th, 2009 categories: Buyers
After a weak holiday shopping season, annual retail sales declined in 2008.
It marks the first annual Retail Sales decline since the government started tracking the data 40 years ago.
It also gives credence to the notion that the U.S. economy is suffering through a deeper recession that previously thought. A pullback in spending — especially during the shopping-heavy month of December — highlights the cautious nature of today’s American shoppers.
And in a strange sort of way, all of this may end up being good news for spring home buyers.
Because Retail Sales are reflective of consumer spending, a dramatic pullback helps to keep the economy in slow gear, countering the inflationary impact of government stimulus and direct intervention. Inflation, you’ll remember, causes mortgage rates to rise. Its absence, therefore, helps to keep mortgage rates low.
In addition, it’s earnings season on Wall Street and weak corporate guidance has spurred a 6-day decline in the Dow Jones Industrial Average. As dollars leave the stock market, investors are parking them in the safer world of bonds. This includes mortgage bonds, of course, which further pressures rates lower.
As we’re seeing, economic weakness — to a point — can be the friend of a person in need of a new home loan. For active home buyers or people entering the market this spring, therefore, the timing may be just right.
(Image courtesy: The Wall Street Journal Online)
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