OPenHouseAdMany potential buyers are still waiting in the wings, not sure that now is the time to buy a house.  They are often afraid of buying before the market has fully recovered, and are concerned that they may lose out if they jump in too early.  Here are 5 reasons they should buy NOW and not wait…

1) Mortgage Interest Rates are on the Rise
While no one has a crystal ball, all of the technical, fundamental, and economic indicators point to mortgage rates moving up in 2013.  All likelihood is that we have seen the best rates already, and waiting is not going to bring them back.

2) Rents are Continuing to Skyrocket
Recently, Zillow reported that rents increased in the U.S. by 4.2% over the last year.  When compared side-by-side, the costs of owning vs. renting a home easily show the benefits of home ownership.

3) Prices are on the Rise
Home prices in most markets are stabilized, and even starting to increase.  This will be hampered slightly with the over cautious approach of appraisers and lenders, but the trend is still showing prices beginning to rise.

4) Mortgage Guidelines Will Continue to Tighten
With government intervention added to an already overzealous underwriting standard, we are poised to see it become even more difficult for the average buyer to qualify for a home loan.

5) FHA Loans To Become Much More Expensive
Starting with FHA Case Numbers pulled on or after June 3rd, 2013, FHA will dramatically raise the costs of FHA Mortgage Insurance, making these loans much more expensive for the consumer.  You can read the FHA Mortgagee Letter yourself HERE.

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Two early reports this morning that should have dealt a blow to the bond and mortgage markets didn’t happen. At 8:15 ADP reported their count on private sector jobs, estimates were for ADP to report an increase of 180K; according the payroll people private jobs increased a huge 325K in Dec. The reaction was somewhat surprising, the 10 yr note price4 fell just 5/32, its yield increased briefly to 2.00% then backed off to unchanged, mortgage prices were unchanged. At 8:30 weekly jobless claims expected -6K, fell 15K to 372K, last week’s claims were revised higher, to 387K frm 381K. Continuing claims fell 22K to 3.595 mil; the smoothing 4 wk. average fell to 373,250 frm 376,500, the lowest since June of 2008.

 

The ADP report didn’t get the reaction the headline might have suggested, the December number may have reflected the so-called purge effect. Workers, regardless of when they are dismissed or quit, sometimes remain on company records until December, when businesses update, or purge, their figures with ADP. They attempt to estimate the change when adjusting the data for seasonal variations, because there were fewer firings at the end of 2011 than in previous years, ADP may find it more difficult to formulate a projection. Traders took that into account in not reacting too strongly to the strong increase.

 

Prior to the 8:15 ADP data, the Challenger jobs data somewhat countered the strong ADP data; job cuts announced by employers rose in December from a year earlier, according to Challenger, Gray & Christmas Inc. Planned firings climbed 31% to 41,785 last month from 32,004 in December 2010, which was the lowest monthly total in 10 years. Normally the Challenger data is seen as a footnote but in this case it tempers the ADP data somewhat.

 

At 9:30 the DJIA opened -45, the 10 yr -1/32 at 1.99% unch and mortgage prices generally unchanged on 30s and +.12 bp on 15s. Stock indexes continued to fall after the open, by 9:45 mortgage prices were +4/32 (.12 bp) on the day. (see below for 10:10 prices that reflect the ISM services sector report that hit at 10:00)

 

At 10:00 Dec ISM services sector index, expected at 53.0 frm 52.0 in Nov, was at 52.6. The sub components; new orders 53.2 frm 53.0, employment 49.4 from 48.9 and prices pd 61.2 frm 62.5. Overall it wasn’t much of support for the ADP jobs numbers earlier; the reaction sent stock indexes lower, increased the gains in MBSs and treasuries. At 9:30 when most prices were set in the mortgage market MBS 30s were +2/32, at 10:05 +5/32, a gain of .09 bp; the 10 yr yield fell tom 1.95%.

 

Europe’s problems continue to trump much of the better data coming from the US; today’s ADP and weekly claims took a back seat to comments out of Greece. Greek Prime Minister Lucas Papademos warned his country may face economic collapse as soon as March. France sold 7.96 billion euros ($10.2B) of debt, with borrowing costs rising in its first bond auction of the year as credit companies threaten to cut the nation’s AAA rating.

 

US interest rates still hold a slight bullish technical bias, today’s reaction to the stronger employment data has been pushed aside, it’s still all about Europe. The 10 yr note, bellwether for US long term rates briefly rose above 2.00% on the ADP and claims data but it once again found support from the news out of Europe. As long as investors and traders are fearful of debt defaults that may seriously damage Europe’s fragile banks, safety in treasuries remains the preferred strategy. That said, US interest rates have not moved much over the past two weeks; safety is still the way to go however the movement into treasuries has slowed. No reason to bail on treasuries but not much solid reason to make huge moves to away.

 

www,PaulCantor.info

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FHA says: It’s ok to flip that house – Dec. 29, 2011.

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Buying a home is getting less expensive for Veterans.  Effective for Veteran Affairs (VA) loans closed on or after October 1, 2011, the VA funding fee will change.

According to VA Circular 26-11-12, changes in the VA funding fee are prompted by the passage of Public Law 112-26, Restoring GI Bill Fairness Act of 2011, and other previous legislation. The following chart is a list of the current and new VA funding fees scheduled to take effect on October 1, 2011.

 

Use/Purpose

Down Payment

Active Duty Veteran

Reservist/National Guard

Current

New

Current

New

First Time Less than 5%*

2.15%

1.40%

2.40%

1.65%

First Time 5% – 9.99%

1.50%

0.75%

1.75%

1.00%

First Time 10% or more

1.25%

0.50%

1.50%

0.75%

Subsequent Less than 5%*

3.30%

2.80%

3.30%

2.80%

Subsequent 5% – 9.99%

1.50%

0.75%

1.75%

1.00%

Subsequent

10% or more

1.25%

0.50%

1.50%

0.75%

Interest Rate Reduction

N/A

0.50%

0.50%

0.50%

0.50%

Assumptions

N/A

0.50%

0.50%

0.50%

0.50%

*Includes “Cash-Out” Refinancing Loans

More information on mortgages for Veterans.

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www.PaulCantor.info

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Eurozone debt concerns resurfaceMortgage markets improved last week on a weak jobs report, expectation for new market stimulus, growing evidence of a global economic slowdown. Rates were especially volatile, too, with the long Labor Day Weekend looming.

Overall, conforming mortgage rates in Virginia improved for the first time in 3 weeks. On a product-by-product basis, though, mortgage rates are faring differently.

According to the Freddie Mac weekly mortgage rate survey, last week, the 30-year fixed rate mortgage was unchanged but the 15-year fixed rate mortgage and the 5-year ARM fell.

The 5-year ARM is at a new all-time low for qualified borrowers.

A drop in 5-year ARM rates throughout Richmond without a corresponding drop in 30-year fixed mortgage rates signals that markets expect the economy to stabilize over the long-term but with weakness in the near-term. The 5-year ARM’s ultra-low rates suggests marked weakness ahead.

The 5-year ARM may get another boost this week, too.

While U.S. markets were closed for Labor Day, Eurozone nations were hit with new wave of sovereign debt concern, this time centered on Italy. Greece, Portugal and Ireland have already been the subject of debt default debate this year. Italy’s inclusion hit equity market hard and safe-haven buying re-commenced.

This should give a good start to mortgage rates this week. Look for rates to start lower. That’s not to say, however, that they’ll finish the week lower. With very little economic data due for release, markets will move on momentum and momentum can change in a flash.

Date Time (ET) Statistic For Market Expects Prior
09/07/11 02:00:00 PM Fed’s Beige Book Sep
09/08/11 08:30:00 AM Initial Claims 09/03/11 400K 409K
09/08/11 08:30:00 AM Trade Balance Jul -$51.5B -$53.1B
09/08/11 03:00:00 PM Consumer Credit Jul $5.0B $15.5B
09/09/11 10:00:00 AM Wholesale Inventories Jul 0.70% 0.60%

The two biggest potential market movers both come Thursday. Fed Chairman Ben Bernanke speaks in Minnesota at 1:00 PM, and United States President Barack Obama addresses the nation at 7:00 PM. Both speeches are highly anticipated and should cause markets to move.

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The S&P / Case Shiller Report released today for April indicates increasing home values.:

 

Data through April 2011 … show a monthly increase in prices for the 10- and 20-City Composites for the first time in eight months. The 10- and 20-City Composites were up 0.8% and 0.7%, respectively, in April versus March. Both indices are lower than a year ago; the 10-City Composite fell 3.1% and the 20-City Composite is down 4.0% from April 2010 levels.

Six of the 20 MSAs showed new index lows in April – Charlotte, Chicago, Detroit, Las Vegas, Miami and Tampa. Thirteen of the cities and both composites posted positive monthly changes. With index levels of 152.51 and 138.84, respectively, both the 10- and 20-City Composites are above their March 2011 levels, which had been a new crisis low for the 20-City Composite.

 

This may be a sign that we have seen or are close to the bottom of the housing market.  Now is a good time to look at buying a home as a primary residence or investment property.  Apply Now to pre-qualify for a purchase.

www.PaulCantor.info

(804) 433-1510

 

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Yes seniors may purchase a home and have no monthly mortgage payment.  This is possible with a reverse mortgage (also known as a Home Equity Conversation Mortgage (HECM))

Here is an example for a 69 year old buying a home.

 

Purchase Price = 200,000

Amount of FHA reverse mortgage  =  $132,600

Funds needed a closing = $68,000

Monthly Mortgage Payment =   $0.00

 

Assumes the seller will pay all closing costs on a fixed rate reverse mortgage.

For more information on a reverse mortgage call (804) 433-1510 or click here.

 

 

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Here is a reminder of items other than mortgage interest and property tax that Virginia Realtors should remember at tax time:

subscriptions to real estate publications

Costs of designing and maintaining real estate web site

Clothing with company logo

Business gifts

Milage for business auto use

Continuing education

greeting cards sent to customers and business partners

Business gifts ($25 per gift max. Limit)

Always consult your tax professional.

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Watch this NBC video, advising prospective first time home buyers to get off the fence and buy a home.  The reasons include, home affordability, low but sure to rise  mortgage rates, seller concessions (buyer’s market) and the uncertain future of Fannie Mae & Freddie Mac:

PaulCantor.info

(804) 719-1515

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