Mortgage Shopping 101- Making Sense of the Mortgage Market

RISMEDIA, October 4, 2010 - Shopping for a mortgage can be time-consuming and difficult for homebuyers, especially in today’s market where many buyers don’t know where to begin. The Federal Reserve Board has put together the following tips so that you can make sense of the mortgage market and be sure you are getting the mortgage that is right for you. 

1. Know what you can afford. Review your monthly spending plan to estimate what you can afford to pay for a home, including the mortgage, property taxes, insurance, and monthly maintenance and utilities. A worksheet for developing your monthly spending plan can be helpful so that you can plan ahead and save for emergencies as well as be sure you will be able to afford your monthly payments for several years. Be sure to check your credit report to make sure that the information in it is accurate.

2. Shop around—compare loans from lenders and brokers. Shopping takes time and energy, but not shopping around can cost you thousands of dollars. You can get a mortgage loan from mortgage lenders or mortgage brokers. Brokers arrange mortgage loans with a lender rather than lend money directly; in other words, brokers sell you a loan from a lender. Neither lenders nor brokers have to find the best loan for you—to find the best loan, you have to do the shopping

3. Understand loan prices and fees. Many consumers accept the first loan they are offered and don’t realize that they may be able to get a better loan. On any given day, lenders and brokers may offer different interest rates and fees to different consumers for the same loan, even when those consumers have the same loan qualifications. Keep in mind that lenders and brokers also consider the profit they receive if you agree to the terms of a loan with higher fees, higher points, or a higher interest rate. Shopping around is your best way to avoid more expensive loans.

4. Know the risks and benefits of loan options. Mortgages have many features—some have fixed interest rates and some have adjustable rates; some have payment adjustments; on some you pay only the interest on the loan for a while and then you pay down the principal (the loan amount); some charge you a penalty for paying the loan off early; and some have a large payment due at the end of the loan (a balloon payment). Consider all mortgage features, the APR (annual percentage rate), and the settlement costs. Ask your lender to calculate how much your monthly payments could be a year from now, and 5 or 10 years from now.

5. Get advice from trusted sources. A mortgage loan is one of the most complex, most expensive financial commitments you will ever assume—it’s okay to ask for help. Talk with a trusted housing counselor or a real estate attorney that you hire to review your documents before you sign them.

For more information, visit www.federalreserve.gov.

Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission fromRISMedia.

James & Patricia Mitchell
Keller Williams Realty
Office: 978-233-2944
Mobile: 978-314-2955
MitchellTeamkw@gmail.com
http://www.themitchellteamkw.com/

Existing Home Sales Show Another Strong Gain in September

RISMEDIA, October 26, 2010—Existing-home sales rose again in September 2010, affirming that a sales recovery has begun, according to the National Association of Realtors. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, jumped 10.0% to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, but remain 19.1% below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November.

Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place, but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.35% in September from 4.43% in August; the rate was 5.06% in September 2009.

The national median existing-home price for all housing types was $171,700 in September, which is 2.4% below a year ago. Distressed homes accounted for 35% of sales in September compared with 34% in August; they were 29% in September 2009.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22 percent less than five years ago when they were bid up by the biggest housing rush on record.”

To illustrate the jump in housing affordability, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.

Housing affordability conditions today are 60 percentage points higher than during the housing boom, so it has become a very strong buyers’ market, especially for families with long-term plans. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home—this is truly an example of how homeownership builds wealth over the long term,” Golder added.

Total housing inventory at the end of September fell 1.9% to 4.04 million existing homes available for sale, which represents a 10.7-month supply at the current sales pace, down from a 12.0-month supply in August. Raw, unsold inventory is 11.7% below the record of 4.58 million in July 2008.

“Vacant homes and homes where mortgages have not been paid for an extended number of months need to be cleared from the market as quickly as possible, with a new set of buyers helping the recovery along a healthy path,” Yun said. “Inventory remains elevated and continues to favor buyers over sellers. A normal seasonal decline in inventory is expected through the upcoming months.

A parallel NAR practitioner survey shows first-time buyers purchased 32% of homes in September, almost unchanged from 31% in August. Investors were at an 18% market share in September, down from 21% in August; the balance of purchases were by repeat buyers. All-cash sales were at 29% in September compared with 28% in August.

Single-family home sales increased 10.0% to a seasonally adjusted annual rate of 3.97 million in September from a pace of 3.61 million in August, but are 19.5% below the 4.93 million level in September 2009. The median existing single-family home price was $172,600 in September, down 1.9% from a year ago.

Existing condominium and co-op sales rose 9.8% to a seasonally adjusted annual rate of 560,000 in September from 510,000 in August, but are 16.2% lower than the 668,000-unit level one year ago. The median existing condo price was $165,400 in September, down 6.2% from September 2009.

Regionally, existing-home sales in the Northeast increased 10.1% to an annual pace of 760,000 in September but are 20.8% below September 2009. The median price in the Northeast was $239,200, which is 1.4% below a year ago.

Existing home sales in the Midwest jumped 14.5% in September to a level of 950,000 but are 26.4% below a year ago. The median price in the Midwest was $139,700, down 5.2% from September 2009.

In the South, existing-home sales rose 10.6% to an annual pace of 1.77 million in September but are 14.9% lower than September 2009. The median price in the South was $149,500, down 2.6% from a year ago.

Existing-home sales in the West increased 5.0% to an annual level of 1.05 million in September but are 16.7% below a year ago. The median price in the West was $213,600, which is 4.9% lower than September 2009.


For more information, visit www.realtor.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

National Civil Rights Groups Renew Call for Immediate Moratorium on All Home Foreclosures

RISMEDIA, October 8, 2010—National civil rights groups, including the Leadership Conference on Civil and Human Rights, the National Fair Housing Alliance, National Council of La Raza, the NAACP, and the Center for Responsible Lending, are renewing their April 2007 call to institute an immediate national moratorium on foreclosures. The civil rights groups believe that until lenders demonstrate that they are adhering to all existing laws, regulations, and contractual guidelines related to loss mitigation and foreclosure legal process, lenders in all 50 states should not move forward with any foreclosures. According to the groups:

• Across the country, lenders are announcing temporary foreclosure moratoria and attorneys general are calling for the same because of systemic illegal foreclosure filings and misrepresentations. Many homes were foreclosed upon based on banks’ fraudulent or inaccurate documentation. While the extent of the fraud continues to be revealed, many lenders have instituted no foreclosure stop at all, and no lender has yet issued a national moratorium.

• Research demonstrates that just as communities of color were more likely to receive predatory subprime loans, they also suffer more from foreclosures. As devastating as it has been for too many American families, the foreclosure crisis has disproportionately impacted communities of color. According to recent research by the Center for Responsible Lending, African-American and Latino borrowers are 75% more likely than their White counterparts to experience foreclosure. Moreover, the higher the concentration of racial minorities in a community, the higher the rates of foreclosure.



• Neighborhoods across America are being destroyed as a result of the foreclosure crisis. The foreclosure crisis fallout is not limited to individual homeowners. Each foreclosure has enormous spillover effects, and communities, especially communities of color, are seeing their home vacancy and crime rates increase while home values and tax bases are eroded.

 • Lenders are not equipped to handle the current volume of home defaults. A foreclosure moratorium will give them a chance to develop adequate systems and capacity to preserve homeownership. The groups are calling on Congress to investigate the widespread fraud and misrepresentation in foreclosure filings, and to revive legislation that would allow loan modifications in bankruptcy court proceedings.

 • All lenders must be required to evaluate homeowners for loan modifications and other solutions, with strong transparency and accountability. Lenders who participate in the government’s foreclosure prevention program (HAMP) or handle government-insured loans are already required to do so. Homeowners must also have recourse when their lenders deny loan modifications leading to unnecessary foreclosures.

 Statements of Supporting Organizations:

 Statement of Wade Henderson, President & CEO of the Leadership Conference on Civil Rights

 “The problem of foreclosure fraud with lenders’ wrongfully manipulating essential data was entirely foreseeable. Several years ago we urged Congress to make a simple change to bankruptcy laws that could have kept countless families in their homes. If we don’t take drastic measures now, we can expect millions of additional foreclosures in the coming years, with a disproportionate number of them involving Latino and African-American families.”


Statement of Shanna L. Smith, President & CEO of the National Fair Housing Alliance:

 “We can draw a direct line from the history and patterns of segregation in America to the disproportionate effects of this crisis on communities of color. For decades, we have asked lenders to provide fair and affordable credit to underserved communities. Instead, these communities were deluged with toxic credit and we’re experiencing the fallout today. Our call for a national moratorium on risky subprime loans went unheeded three years ago. In the intervening time, most attempts to mitigate foreclosures have proven to be unsuccessful while more and more people defaulted on loans. We hope that our call for a national halt on all foreclosures will be implemented today.”


Statement of Hilary Shelton, Director of the Washington Bureau for the NAACP:



“The foreclosure crisis has decimated American neighborhoods across our nation, and it has had a disproportionate effect on racial and ethnic minority families. Experts and scholars now project that it will take decades for communities of color to recover from the crisis. Racial and ethnic minority Americans have historically been the hardest hit by economic crises and that is certainly true today. The civil rights community warned the nation three years ago that if nothing was done to intervene that the crisis would impose the greatest loss of wealth ever experienced by the African-American and Latino communities. Sadly, this is being borne out.”



Statement of Janet Murguia, President and CEO of the National Council of La Raza:
“Latino and African American families have been deeply harmed by the economic crisis through the loss of homes, jobs, and entire neighborhoods. Families continue to experience losses that extend well beyond the physical house to concerns over their children’s physical, mental, and emotional well-being, and the evaporation of the family’s financial security. Our communities were targeted by predatory lenders. As a result, more than 1.3 million Latino families will lose their homes to foreclosure by the end of the crisis. Foreclosure prevention programs are not working, foreclosure rescue scams are rampant in our communities, and now fraudulent documentation is leading to a new wave of foreclosures. Enough is enough.”


Statement of Michael Calhoun, President & CEO of the Center for Responsible Lending:

“When we first issued our call three years ago, the industry responded by stating that we were crying wolf, that the foreclosure problem would be contained. They were wrong, and as a result, we have had millions of preventable foreclosures. What’s more, our research reveals that African-Americans and Latinos are almost 75% more likely to experience foreclosure than Whites. We cannot allow this injustice to continue. Mortgage servicers and lenders must work to preserve homeownership when possible; when not possible, they must follow the law when foreclosing.”






For more information, visit http://www.nationalfairhousing.org

How to Be Happy...

Found this great excerpt about what we can learn from our dogs! Thought it was awesome and wanted to share.

My dog is in a state of almost continuous delight and discovery, so I decided to study his attitude to see what he was doing that I was missing:

• You will not find my dog wasting his energy nursing a worry.  He has no sense of the past or future.
• My dog doesn't need to impress anyone or prove himself.  He is what he is, and that is enough.
• My dog doesn't hold grudges.  A psychologist once said that a healthy amount of time to feel a negative emotion is five to eight minutes.  If it lingers past that, you are holding onto something too long.  My dog could have told him that.
• When my dog gets tired during long walks, I pick him up and carry him for awhile.  Harboring no guilt or feelings of unworthiness, he does not protest, "You really don't need to do this." Or "I will carry you tomorrow." He just lies in my arms, and soaks it in.  He knows he is worth the love he receives, and he accepts it.
• My dog gives me the same wholehearted greeting no matter how long I have been away.  When I come home after a long time, he doesn't sit on his haunches with his arms folded and soberly announce, "I think its time we discussed your commitment to our relationship."  He is just happy to see me, and he lets me know it.
• I never have to guess at what's on the mind of my dog: When he is happy, he wags his tail.  If he isn't feeling well, he cries.  When he wants to play, he jumps into my lap.  When he doesn't feel like playing, he walks away.
• My dog knows its okay to ask for what he wants-- even though sometimes he doesn't get it.
• If I would just focus on my goals as intently as my dog focuses on the ball I'm about to throw, I could get everything I ever wanted.
• My dog trusts that life will take care of him, so he doesn't struggle.
• My dog knows that his purpose in life is to enjoy the adventure.  He finds joy wherever he is.
• Insofar as I can tell, my dog is an enlightened being--yet he doesn't read a lot of books; he has never gone to a seminar, and would probably have a problem balancing his checkbook.  Perhaps, if I play my cards right, one day I will wake as happy as he seems to be.

                        -from Are You As Happy As Your Dog? by Alan Cohen