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Great Time to List Your Home - Low Inventory and Low Interest Rates

by The Cincinnati Team

 

INVENTORY, RATES, DEMAND PUSH PRICES HIGHER

Low interest rates have triggered strong buyer demand across the country, and market activity has been pushing prices upward. Freddie Mac reported another record low for 30-year, conventional fixed-rate mortgages when the national commitment rate dropped to 3.35 percent in November. The rate was 3.99 percent at this time last year.

As inventory continues to drop, we can expect to see more pricing adjustments as buyers compete for the same homes. Time on the market has dropped to 70 days in November, and available inventory has fallen another 3.8 percent to just over 2 million existing homes for sale. At today's sales pace, existing-home inventory will be exhausted in 4.8 months, creating the lowest housing supply since September 2005.

Regionally, existing-home sales rose 7.9 percent in the South, 7.2 percent in the Midwest, and 6.9 percent in the Northeast. Existing-home sales in the West were up 0.8 percent in November, representing a 4.4 percent increase over 2011 levels for the region.

 

Homes are on Sale in Cincinnati

by The Cincinnati Team

Homes are on Sale in Cincinnati!

Low mortgage rates on Cincinnati homes make all homes seem like they are on Sale!  As the inventory starts to get snatched up this Spring, buyers feel like they are getting bargains.

Not only are they looking at the price of the home they are buying, which may be as low as prices in the 2000-2003 time frame, they are looking at the interest rates.  Home affordability is setting all time records.  Prices are down, but the interest rates are making even a bigger difference in your wallet.

Currently, the interest rate is under 4% for a 30-year fixed rate.  When you compare it to historical average rates, it is pretty unbelievable.  

SupposeCincinnati mortgage rates you have a $1000 payment for principal and interest:

  • Historical Average Rate (8.75%): a $1000 monthly payment allows you a $127,113 purchase price for your home.
  • Today's Average Rate (3.66%): A $1000 monthly payment allows you a purchase price of $218,329.

So, what are you waiting for...it's time to buy. Whether you are a first time buyer or a move up buyer, this may be the opportunity of your lifetime to move into your dream home.

 

Fall 2011 Trends in Mortgage Lending

by The Cincinnati Team

Lending and Buying Trends                             

Mortgage backer Freddie Mac reported that mortgage interest rates fell to a record low in September. The average commitment rate for a 30-year, conventional, fixed-rate loan dropped to 4.11 percent in September, down from 4.27 percent in August.  September's rate was almost a quarter point below 2010 interest levels when similar mortgage loans were offered at 4.35 percent.

Despite the low interest rates, contract failures remain double of what they were just last year. Contract failures - caused by issues with credit, loan underwriting, or appraisal - reached 18 percent in August and September. NAR President Ron Phipps would like to see more access to credit.  "All year we’ve been discussing the fact that many credit worthy home buyers are being denied mortgages,” he said. "We need to remove the roadblocks to a housing recovery."

Investors accounted for 19 percent of September transactions down slight from 22 percent in August.  First-time buyers represented 32 percent of existing-home purchasers, while repeat buyers made up the balance. 

The Low Cost of Financing

by The Cincinnati Team

The Low Cost of Financing                                                 

According to Freddie Mac, the average commitment rate for a thirty-year, conventional fixed-rate mortgage loan was at 4.95 percent in February, which is down from 4.99 percent in February 2010. Home financing costs are at historic lows, making home ownership a reality for many first time buyers! Many experts see rate increases on the horizon, as our nation seeks to balance spending. If you are considering a home purchase or a refinance, be sure to work with a loan officer who understands your needs, has a reputation for excellence, and is able to fund your property in a timely manner. A little homework can save you thousands of dollars. Contact us today for our list of local recommended mortgage lenders.

Cincinnati Housing Affordablility Rankings Released

by The Cincinnati Team

Home Affordability Rankings Released                             
Good News Cincinnati Buyers...more that 72 percent of homes sold between April-June, 2010 were affordable to families earning the national median income.  This data tracked by the National Association of Home Builders indicates that this is the second highest reading in the survey's history.

Be glad you don't live in the highest priced areas...10 out of 13 of which are located in California.  The highest markets are in New York City, White Plains, NY and Wayne, NJ. There, only 20% of homes are affordable to families eaning the local median income. The lowest priced markets are Monroe, MI; Bay City,MI; Mansfield, OH; Springfield, OH and Syracruse, NY.

You may be wondering how they determine these numbers.  The home affordability index is calculated based on the combination of home prices and mortgage rates.  And, of course, it makes your home more affordable.

Cincinnati is especially affordable as well.  We currently rank 46th nationally.  88.4% of our homes are considered "affordable"...meaning that the family earning the median income can afford to buy a home.

Should We Refinance?

by The Cincinnati Team

I refinanced my house nearly 6 months ago...very excited at how much I was able to reduce my payments.  Now, I'm kicking myself because I did not get the lowest possible rate...the rate available today!

If you missed the refinance boom of November, 2009, you can now take advantage of the lowest rates in the past 40 years.  How do you decide if you should make this move?

Typically experts say that you need to look at what the percentage interest rate will adjust to, preferably at least one percent below your current interest rate.  Secondly, you need to consider how long you expect to stay in your current home.  Usually, if you stay at least 2 years, you will come out ahead in the process (because you need to look at the amount saved compared to the closing costs.

What should you expect in refinancing today?  Yes, loans are harder to get today.  Banks are investigating your finances to the finest detail. Rates will be dependent upon your credit score.  The type of rate you would have gotten in 2007 with a 640 credit score, now requires a 740 credit score.  As a result, plan on the process taking 5-8 weeks.

Appraisals are sometimes a surprise.  You need to look carefully at how much equity you have in your home.  If you did a 100% loan in 2007, you probably do not have enough equity built up to get a loan today.  For most of us, even though we know that the news is that prices have gone down, we tend to not think that our personal house's price has gone down.

Consider you debt.  No matter what, it is important to look at our total debt in making credit decisions.  Most lenders do not want you to have a home loan that is higher than 25% of your income.

Compare lender's closing costs as well as interest rate offered.  There are wide variations in closing costs from one lender to another.  Check it out before you actually decide on your lender.

Good luck...I hope you can save 100's of dollars!

Mt. Adams Market Snapshot - May, 2010

by The Cincinnati Team

Homes and condo sales continued at a brisk pace in May, 2010 in Mt. Adams.  6 homes closed in the month of May.  There are currently 4 homes pending closing and 40 hMt. Adams Market Snapshot - May, 2010omes and condos that are actively listed for sale.

 

 

 

 

 

 

 

 

 

 

Mt. Adams is one of the few areas of Cincinnati showing signs of rebounding. Prices so far in 2010 are significantly above last year and 2005.  Most homes in Cincinnati are currently averaging below prices sold for in 2005.  This is causing difficulties for people wanting to refinance in this time of extremely low mortgage rates.  It is also a problem for those with little equity in their home, who need to sell because of a relocation or change in family circumstances.

According to Credit Suisse's monthly survey, traffic levels (number of visitors to homes for sale) have been slower in May.  This is caused by the end of the homebuyer tax credit.  It forced many buyers to buy ahead of what might have been their regular time schedule. Low traffic levels may result in a longer time to sell a house and price reductions.

The Cincinnati Multiple Listing Service reported an overall uptick of 25% from May of 2009 to May of 2010 on the number of homes sold in the region.  That is more than the 19% reported for nationwide home sales.  June sales are expected to also remain strong as the last of the tax credit homebuyers close on their homes.

Tax Credit Expires Soon - Don't Miss Out on the IRS Benefit

by The Cincinnati Team

31 days until the Tax Credit Deadline

The Extended Home Buyers Tax Credit offers current homeowners and first-time home buyers alike an incredible tax-saving opportunity when they buy a home through April 30, 2010. First time buyers, who haven't owned a primary residence in the past three years, are eligible for a tax credit of 10 percent of a home's purchase price, up to a maximum of $8,000. $8000 Tax credit

Current homeowners are also eligible for a tax credit of their own. Homeowners who have lived in their primary residence for 5 consecutive years of the past 8 are eligible for a tax credit of 10% of a home's purchase price, up to maximum of $6,500.

The following conditions apply:

  • The tax credit is only awarded on homes purchased for $800,000, or less
  • Full tax credit is available to buyers earning up to $125,000 a year, or $225,000 for married couples filing jointly
  • Partial tax credit is available to buyers earning between $125,000 to $145,000, or for married couples earning between $225,000 to $245,000.
  • Under the rules, as long as a written binding purchase contract is in effect on April 30, 2010, the buyer has until July 1, 2010 to close.

The tax credit is a dollar-for-dollar reduction in the buyers tax liability, and does not have to be paid back as long as the buyer remains in their home for three years or more. This is a once-in-a-lifetime offer to have Uncle Sam help you buy a house. Don't let this opportunity pass you by!

FHA's New Financing Rules Pinch Home Buyers

by The Cincinnati Team
FHA's New Financing Rules Pinch Home Buyers and May Reduce the Buyer Pool.
Changes to mortgage underwriting dictated by FHA will make it harder for households to secure affordable home financing.  FHA announced that these changes need to be made to shore up the FHA's capital reserves and help the agency do a better job of managing risk.
 
Why?
The value of the FHA's reserves to cover losses (that means BAD LOANS) has fallen to $3.6 billion, about 0.5% of the $685 billion in loans outstanding, down from 3% a year earlier. Congress requires the agency to maintain a 2% capital-reserve ratio.
 
Since the beginning of the economic downturn, an increasing number of borrowers have needed to use FHA loans in order to purchase a home.  These loans currently require 3.5% down payment plus closing costs and mortgage insurance.  However, it is the lowest cost alternative for those who have little down payment...the old 100% loans are simply no longer available.
 
FHA to Increase Mortgage Insurance Fees
FHA will require more-stringent lending requirements and higher borrower fees to cushion against rising defaults and stave off the need for a taxpayer bailout of the agency. FHA is set to raise the mortgage insurance premium to 2.25% from the current 1.75%. This will increase the monthly payment by $50-100, and increase the money needed to close. This change takes place on April 5th, so it will affect most of those trying to close by June 30 and qualify for the $8000 tax credit.  Higher closing costs= fewer buyers
 
Minimum Credit Score
FHA will require riskier borrowers with credit scores below 580 to make a minimum 10% down payment. While the FHA doesn't have a credit-score cutoff, most lenders require a minimum 600-620 score. This change is expected to go into effect in the early summer.  Higher credit scores and down payment = fewer buyers.
 
Seller Contributions
FHA will reduce the amount of money that sellers can kick in for closing costs to 3% of the sale price, down from the current level of 6%. This change is also expected to go into affect in early summer.  Reducing seller concessions = fewer buyers.
 
Increase enforcement on FHA lenders
HUD will also monitor lender performance and compliance with FHA guidelines and standards. This increased surveillance and enforcement will look at default rates as well.  Fear of making loans = fewer buyers.
Believe it or not, FHA makes nearly 40% of all loans made today.  It is important to keep this option available to borrowers, but in this tight market, we all worry that the additional down payment needed will deny home ownership to many prospective buyers and further damage the housing industry.

Don't Ding Your Credit Score!

by The Cincinnati Team

So, everyone says you should be careful to maintain high credit scores.  So, the loan officer says you can only get the best mortgage interest rates if your credit score is over 720.  So you wonder just how much you will get dinged if you do any of the "no, no's" of credit management.

MSN Money says that the following negative information will affect you credit score by...

Effect on a 680 score      Effect on a 780 score

Maxed out credit card            -10 to -30                     -25 to -45

30 day late payment              -60 to -80                     -90 to -100

Debt settlement                    -45 to -65                      -105 to -125

Foreclosure                          -85 to -105                     -140 to -160

Bankruptcy                          -130 to -150                    -220 to -240

Displaying blog entries 1-10 of 19

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