The Home Price Index – Not Good

Nothing like starting the week with bad news but here it goes: The S &P/ Case Shiller National Home Price index plunged a record 19.1% for the first quarter. Phoenix, AZ is on top with a 36% decline which brings that particular cities market down 53% since it’s peak in mid-2006.

So to make lemonade out of lemons there are some great bargains out there people. Time to get busy. Phoenix has also seen the start of bidding wars again.

Mortgage rates ended slightly higher for last week. The Fed has indicated that they might be willing to commit more money to buying mortgage backed securities. The Fed buying mortgage backed securities is the biggest reason for low rates. The problem came over the next two days when rumors surfaced that they might instead slow mortgage backed securities purchases in order to extend into 2010. Add to that $162 billion in Treasuries and you have higher rates (increased supply pressures prices lower and therefore rates higher).

RATES:
The Freddie Mac Primary Mortgage Market Survey for last week was 4.82% with .7% Fees/Points (about even with 4.86% with .6% Fees/Points) for a 30 year fixed rate loan. The 15 year fixed rate was unchanged at 4.50% with .7% Fees/Points (about even with 4.52% with .6% Fees/Points for the previous week).

First Time Home Buyer Incentives Are Working

The last blog was about the first quarter foreclosure report. So now we’ll go in the opposite direction and have some good news from the real estate world.

Received an email from Patrick Aguiluz who has a great story from a family who are about to great improve their situation due to the new first time home buyer incentives the government come out with

From Patrick Aguiluz:

“I am about to put a family who is presently renting an apartment in West Covina at $1,400/month into a single family house in Fontana that they are purchasing for $125,000. They have qualified for a FHA loan so they will be coming up with a 3.5% down payment of $4,375. The estimated closing cost is $3,000, making their total out of pocket $7,375. Because they are buying in 2009, they will receive an $8,000 tax credit that will offset their out of pocket cost of $7,375. In fact, they will net $625 for buying a house.

“Their new monthly payment will be around $565 (most of which will be tax deductible), saving them $835 per month ($1,400 – $565). When they were renting, none of the payments they were making towards rent were tax deductible. The $835 monthly savings will give them an additional $10,020 per year. Imagine what they could do with that extra cash? In addition, the house that they are purchasing had a peak value of $350,000. If and when that property returns to its peak value, they would have gained $225,000 of equity on the $7,375 that they came out of pocket with when they initially purchased the house. Keep in mind that the $8,000 tax credit that they received basically gets them into the house at no cost.

“They now live in a house where they were basically paid $625 ($8,000 – $7,375) to move into, they save $835 a month, and have upside potential when the property appreciates.”

Nice to hear some good news from the economy. Interest rates still low so it’s a good time to talk with your mortgage broker. Also, banks now understanding the need for loan modifications. If you’re in trouble or the upcoming months look bleak, give me a call or email and we can discuss your options. And it’s always a free consultation.

928-226-8073
craig@ioubuyer.com

States With The Most Foreclosures

The metro areas with the highest foreclosure rate, as of the first quarter of 2009 are in just 4 states. The top 26 cities for foreclosures are in California, Florida, Nevada and Arizona, with Las Vegas holding the number one spot according to RealtyTrac.

One in every 22 homes in Las Vegas was filing for foreclosure in the first three months of this year. The rate of foreclosure filings was 4.5%, seven times the national average.

Merced, Calif., had the second highest rate, with Cape Coral-Fort Myers, Fla., Stockton, Calif., and Riverside-San Bernardino-Ontario, Calif., rounding out the top five.

“The metro areas with the highest levels of foreclosure activity in the first quarter of 2009 paint a picture of concentrated problems in a relatively small number of hard-hit areas,” said James J. Saccacio, chief executive officer of RealtyTrac, in a written statement.

“The concentration of troubled metro areas within the hardest-hit states, candidly, was even more severe than we expected it to be,” Sharga said. “The degree to which those four states dominated the rankings surprised even us.”

New problem cities: Meanwhile, some metropolitan areas had a surge in foreclosures. Boise City-Nampa, Idaho, in 27th place, Provo-Orem, Utah, in 37th, and Charleston-North Charleston, S.C., in 51st were examples Sharga gave of areas that had particular strong gains in filings.

“What we believe we are seeing is some of the areas with unemployment problems,” said Sharga. “These are people living paycheck to paycheck and, when the paycheck is gone, suddenly they can’t afford to make their mortgage payments.”

2,200 U.S. counties are counted for the report which represent more than 90% of the American population.

Foreclosure activity across the nation has hit a record high according another RealtyTrac report. 803,489 foreclosure filings in the first three months of the year, the highest monthly and quarterly totals since RealtyTrac began reporting in January 2005.

Across the nation, foreclosure activity in the first quarter hit a record high, according to another RealtyTrac report issued last week. Total foreclosure filings reached 803,489 in the first three months of the year, the highest monthly and quarterly totals since RealtyTrac began reporting in January 2005.

The national report also found that the worst of the foreclosures were centralized in a handful of worst-hit states. California, Florida, Arizona, Nevada and Illinois accounted for nearly 60% of the total foreclosure activity in the first quarter, with 479,516 properties received foreclosure filings in those states.

Swine Flu Increases Mortgage Rates

Strange that an impending pandemic could actually improve mortgage markets but seems to be the case with the swine flu cases.

On Monday we saw a classic example of Safe Haven buying and mortgage rates increased by about 0.125 percent.

“Safe Haven” buying describes the scenario where investors move money from risky investments and into safer ones. Generally stocks are sold off and bonds are bought, which includes mortgage-backed bonds.

So with fears that a global swine flu outbreak could slow the already slow recovery, investors dumped money into mortgage-backed bonds thus increasing mortgage rates.

Since the future is uncertain, when bad news comes to town traders like to play it safe. All of which shows us that events we have no control over nor can we prepare for often control the market.

Now with the Federal Reserve meeting today and tomorrow, markets could be ripe for a correction.

What’s Happening in the Economy This Week

Well the good news is that banks are seeing an increase in profits from all the mortgage refinancing that’s been going on. First time banks have been seen making money in quite a long time.

Another ray of sunshine is that factory orders and the initial jobless claims were slightly better than expected and consumer confidence was also slightly up.

And though the country as a whole showed a decline in existing home sales, parts of Arizona, California and some other hard hit states.

It was also announced that the national median existing-home price was $165,400 in February, down 15.5% from last year, when the median price was $195,800.

RATES: The Freddie Mac Primary Mortgage Market Survey for last week was 4.82% with .6% Fees/Points for a 30 year fixed rate loan (Down from 4.87% with .7% Fees/Points). The 15 year fixed rate was 4.48% with .6% Fees/Points (Down from 4.54% with .7% Fees/Points).

12 Tips to Help Keep You Out of Foreclosure

As homes continue to slide into foreclosure many homeowners are looking for ways to avoid losing their homes.

Here are 12 tips if you are concerned about your home going into foreclosure:

1. You need to convert your adjustable rate mortgage to a fixed rate mortgage.

2. Stay within your monthly budget. Monitor your income and expenses every month.

3. Before you buy something with your credit cards ask yourself: “Do I really need this or just want it.”

4. Start a contingency fund to deal with any sort of monetary loss due to job loss, sickness or any other unforeseen circumstance.

5. Live within your monthly paycheck. If that means losing some luxury items and eating out less then do it.

6. Use coupons, buy generic brands and unplug “energy sucking” appliances when you’re not using them. Park you car in the shade, though slowly, gas does evaporate in the hot sun.

7. Review your credit report annually to make sure it’s all in order.

8. Have your financial records in order. If you have to deal with a credit problem it saves a lot of time and hassle.

9. If you are going to miss a mortgage payment or think you might, talk with your leader. See if you can modify the loan to make the monthly payments more affordable.

10. If you have missed a payment, ask your bank or lender for a repayment plan or special forbearance.

11. Each state has a difference foreclosure process. Understand the laws in your state, just in case.

12. This is a very confusing process and the stress can make it even harder. Talk with a foreclosure counselor if you need help. Most will offer a free consultation.As British Prime Minister Winston Churchill said after WWII: “Never Give Up!” There are options to help you save your home from foreclosure. It will take effort and work but it might be possible to avoid foreclosure.

What Is A Loan Modification

If you find yourself behind on your mortgage payments and are now a few months away from being foreclosed on it is possible to modify the loan with the lender so you can save your home and create stability for your family.

Banks and lenders are finally seeing the benefits of having you stay in your home. By creating a loan modification, you can change terms of your mortgage, a mortgage “do-over” if you will.

Here at Kula Investments, we have helped countless numbers of homeowners save their home from foreclosure and lower their monthly mortgage payments up to 60%.

A loan modification is a permanent change in one or more of the terms (interest rate, monthly payments, length, etc.) of your mortgage. The modification allows the loan to be reinstated and creates payments you can afford.

You can even roll many of the costs of the loan modification into the new balance so you don’t have to plunk down a fee up front. In addition, late charges are often waived at the time the loan modification is agreed upon.

Your interest rate may change with a loan modification, but a good modification should take your current circumstances and ability to pay into account. For this reason, a clear picture of your current financial situation is vital to creating your plan.

When done correctly, a loan modification makes everybody happy. You get to keep your home with reduced payments you can handle. Your lender, bank or other company, gets to make money on your home loan rather than losing money through foreclosure.

A loan modification is lengthy and complex process which most people can’t navigate alone. So we’ve created a system to help you.

Please call or email today for a free loan modification consultation: (928) 226-8073  | craig@ioubuyer.com

Making Home Affordable Refinance Program

The Making Home Affordable refinance program starts this week. If have not been able to refinance due to your homes declining value even though you have still been paying your mortgage this will help.

This week starts part one of this program which will allow those of you who owe between 80% and 95% of your home’s value on your first mortgage to refinance without mortgage insurance (unless you currently have MI). The next phase begins in May for those who are between 95% and 105% of your home’s value. This is available for investment properties and second homes as well!

Check with your mortgage broker to get the details.

The Freddie Mac Primary Mortgage Market Survey for last week was 4.78% with .7% Fees/Points for a 30 year fixed rate loan (Down from 4.85% with .7% Fees/Points). The 15 year fixed rate was 4.52% with .7% Fees/Points (Down from 4.58% with .7% Fees/Points).

The Difference Between Credit Score And Credit Report

When getting a loan, whether for a house, car or big purchase item, a financial institution will look at your credit score to see what kind of risk they will incur by loaning you this money.

A credit score comes from a credit report. A credit report details your credit availability and your habits: Do you pay your bills on time; What are your monthly payments; How many credit cards do you have; What is the line of credit on those cards; What is the balance; Do you have a mortgage; Have you filed for bankruptcy?

A lender will look at this report and decide whether the loan is a good or bad risk.

When you buy something with your credit card, pay a bill (or don’t pay a bill), apply for a credit card, take out a mortgage or finance your car with the dealership, the information gets report to one or all three of the credit reporting agencies: Equifax, Experian, and TransUnion. The agencies collect this data then sell the report to businesses and lenders to they can evaluate your credit application.

The three agencies use proprietary formulas to calculate the credit information on the report. As not all creditors (credit card companies, banks, landlord, department stores, etc.) report to all three agencies and each calculates the information differently so your credit score will differ from each agency.

There are different formulas for getting a credit score from the credit reports depending on what kind of credit or loan you are applying for. The most famous is the FICO score which is used for mortgages, car loans, and credit cards. The formula was developed by
Fair Isaac and Company (Fair Isaac and COmpany – FICO) and is used to show the possible loan default risk.

A lender will pull your credit report from all three of the reporting agencies or just one and use the FICO software to create your credit score. The FICO score assigns a number from 850 (great credit) all the way down to 300 (horrid credit). The average consumer in American has a credit score of around 620.  As mentioned above, not all creditors (credit card companies, banks, landlord, department stores, etc.) report to each of the three agencies and since each agency uses a different method to calculate your credit information your score will differ from each agency, sometimes as much as 50 – 100 points. A credit score might look something like this: 650, 620, 642, with the lender taking the middle score as the average, so that this person has a credit score of 642.

The following factors go into calculating your credit score:

1.    Your bill paying history. Do you pay your bills on time?
2.    Your loans and credit card debt.
3.    How long have you had credit?
4.    How many lines of credit do you have?
5.    Have you opened up new lines of credit or have there been multiple inquires.

What’s Going On In The Economy

Interest rates are once again dropping to historic lows. If you are still thinking about refinancing now would be a great time to talk with a mortgage broker.

The Freddie Mac Primary Mortgage Market Survey for last week was 4.85% with .7% Fees/Points for a 30 year fixed rate loan (Down from 4.98% with .7% Fees/Points). The 15 year fixed rate was 4.58% with .7% Fees/Points (Down from 4.61% with .7% Fees/Points).

The Fed purchased another $33 billion in mortgage backed securities and Gross Domestic Product was a bit worse than thought declining to 6.6%.

Some good news is that personal savings rate has risen above 4% again after so many years of a negative savings rate. Also most people’s 401k’s got a little lift over the past two weeks.

But the bad news is that the ISM (a manufacturing survey of purchasing executives at 300 companies) came in low at last month at 35.8 and is expected in at a terrible 36.0 this month. Below 50 shows economic contraction and below 41 reflects recessionary levels.