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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According o Reuters now is the time to buy:  Term Life Insurance, TVs, Apps, Used Cars and Real Estate.  Prices are set to rise and money is cheap:

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CoreLogix reports year-to-year home values up 7.4% (November)

From CoreLogic: CoreLogic® Home Price Index Rises 7.4 Percent Year Over Year in November

Home prices nationwide, including distressed sales, increased on a year-over-year basis by 7.4 percent in November 2012 compared to November 2011. This change represents the biggest increase since May 2006 and the ninth consecutive increase in home prices nationally on a year-over-year basis. On a month-over-month basis, including distressed sales, home prices increased by 0.3 percent in November 2012 compared to October 2012. The HPI analysis shows that all but six states are experiencing year-over-year price gains.

Excluding distressed sales, home prices nationwide increased on a year-over-year basis by 6.7 percent in November 2012 compared to November 2011. On a month-over-month basis excluding distressed sales, home prices increased 0.9 percent in November 2012 compared to October 2012. Distressed sales include short sales and real estate owned (REO) transactions.

The CoreLogic Pending HPI indicates that December 2012 home prices, including distressed sales, are expected to rise by 7.9 percent on a year-over-year basis from December 2011 and fall by 0.5 percent on a month-over-month basis from November 2012 reflecting a seasonal winter slowdown.

“As we close out 2012 the pending index suggests prices will remain strong,” said Mark Fleming, chief economist for CoreLogic. “Given the recently released QM rules issued by the CFPB are not expected to significantly restrict credit availability relative to today, the gains made in 2012 will likely be sustained into 2013

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The S&P/Case-Shiller index of property values in 20 cities increased 4.3% from October 2011, the biggest 12-month advance since May 2010. Remember the spring of 2010 was skewed due to the tax credit being given at that time.  Estimates were for an increase of 4.0%. Home prices adjusted for seasonal variations rose 0.7% in October from the prior month, with 17 of 20 cities showing gains. Las Vegas showed the biggest gain with a 2.4% advance, followed by San Diego with a 1.7% increase. Property values dropped the most in Chicago, which fell 0.7% over the month.

This  is positive news for the housing market.

Sustained Recovery in Home Prices According to the S&P/Case-Shiller Home Price Indices

 

 

 

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From CoreLogic: CoreLogic® July Home Price Index Rises 3.8 Percent Year-Over-Year—Biggest Increase Since 2006

Read more at http://www.calculatedriskblog.com/2012/09/corelogic-house-price-index-increases.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29&utm_content=My+Yahoo#OWwMUcF9IeVOhrcR.99

 

Calculated Risk: CoreLogic: House Price Index increases in July, Up 3.8% Year-over-year.

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Greece still roiling U.S. mortgage marketsMortgage markets gained last week, picking up momentum into the weekend. Global demand for mortgage-backed bonds helped push mortgage rates to new lows, and closing costs eased somewhat, too.

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage rate fell to 3.89% nationwide. In order to get access to 3.89% mortgage rates, Freddie Mac said, mortgage applicants should expect to pay a full set of closing costs plus 0.7 discount points.

1 discount point is equal to 1 percent of your loan size.

Loans with “low closing costs” or “no closing costs” will be at higher rates than Freddie Mac’s published, average rate.

The biggest reason why mortgage rates fell last week is because — once more — concerns over European sovereign debt resurfaced on Wall Street. This has been an ongoing story for more than a year, and one that won’t likely end soon.

Several Eurozone nations saw their respective credit ratings downgraded last week, a move that sparked safe haven buying of U.S. mortgage bonds. France was stripped of its top credit rating. Slovakia, Italy and Austria were each downgraded, too.

Markets were also influenced by a conflict between Greece’s creditor banks and the nation-state’s government. The breakdown in talks increases the likelihood of the Eurozone’s first sovereign default.

Meanwhile, domestically, in-line Retail Sales figures and rising consumer confidence helped to prop up the U.S. dollar, a move that’s linked to lower mortgage rates.

This week, the markets were closed for the federal holiday Monday, and re-open Tuesday without much data on which to trade. Several inflationary reports are set for release including the Producer Price Index and the Consumer Price Index; and, in housing-related data, we’ll see the Housing Starts report and Existing Home Sales figures for December.

Date Time (ET) Statistic For Market Expects Prior
01/18/12 08:30:00 AM PPI Dec 0.10% 0.30%
01/18/12 08:30:00 AM Core PPI Dec 0.10% 0.10%
01/18/12 09:15:00 AM Industrial Production Dec 0.50% -0.20%
01/18/12 09:15:00 AM Capacity Utilization Dec 78.10% 77.80%
01/19/12 08:30:00 AM Initial Claims 01/14/12 385K 399K
01/19/12 08:30:00 AM CPI Dec 0.10% 0.00%
01/19/12 08:30:00 AM Core CPI Dec 0.10% 0.20%
01/19/12 08:30:00 AM Housing Starts Dec 673K 685K
01/19/12 08:30:00 AM Building Permits Dec 680K 681K
01/19/12 10:00:00 AM Philadelphia Fed Jan 10 10.3
01/19/12 01:15:00 PM 10-year Treasury TIPS Auction n/a n/a n/a
01/20/12 10:00:00 AM Existing Home Sales Dec 4.55M 4.42M

Expect mortgage rates to follow the Eurozone story this week. Pessimism and weak data will be good for mortgage rates in Virginia and nationwide. Strength will lead mortgage rates higher.

If you’re still floating a mortgage rate or have otherwise yet to lock, mortgage rates are lower than they’ve been in history. It’s an ideal time to make aan interest rate commitment.

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Conforming Loan Limits lowered in 2011

For homeowners in high-cost areas nationwide, conforming and FHA loan limits have dropped by as much as 14 percent.

The following are FHA and Conforming (enhanced) mortgage loan limits for purchase and refinance transactions in VIrginia:

– Richmond Area: $535,900

– DC Metro (N Va including Fredericksburg): $625,500

– Norfolk / VA Beach Area:  $458,850

– Charlottesville Area:  $437,000

Effective October 1, 2011, the temporary mortgage loan limits that allowed for non-jumbo loan sizes of up to $729,750 are no longer.

$729,750 is above the “normal” loan limit of $417,000.

The elevated limits were put in place in 2008 as the economy and financial sector entered its crisis. At the time, there was little private money to serve buyers and would-be refinancers whose loan sizes exceeded Fannie Mae and Freddie Mac’s maximum $417,000 loan limits.

For most people whose loan sizes exceeded that threshold, mortgage financing was unavailable. There were no lenders to back the loan size.

This was of particular importance in places such as New York City, Los Angeles and Washington, D.C. where home prices routinely top $1 million. For people in these areas, unless they had a downpayment that could lower their respective loan sizes to $417,000 or lower, mortgages were mostly unavailable.

Congress recognized this and, as a result, gave Fannie Mae and Freddie Mac temportary authorization to purchase and securitize home loans of up to $729,750 in value, depending on where the subject property was located.

The program helped housing, leading Congress to pass more permanent, location-specific loan limits. Later that same year, Congress passed the Housing and Recovery Act of 2009 which, in part, made high-cost loan limit pricing permanent, albeit at $625,500.

The $729,750 temporary limits expired Friday, September 30, 2011. Today, the maximum allowable conforming loan size is $625,500.

If you live in a high-cost area, therefore, take note. Mortgage rates may be low, but the amount of loan for which you qualify may be less than you expect, and you may find yourself ineligible.

The complete list of high-cost areas is available online.

www.PaulCantor.info

 

 

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FOMC meeting on TuesdayMortgage markets were especially volatile last week, taking rate shoppers in Virginia on a roller-coaster ride. The week’s news schedule was full. It included debt ceiling debates, jobs figures, and ongoing maneuverings within the Eurozone.

Each story a material impact on mortgage rates and, as a result, rates varied wildly from day-to-day.

Throughout the early part of the week, mortgage rates fell.

Monday, bond markets improved as leaks of the congressional debt ceiling agreement surfaced. Investors approved of the accord’s general terms and bought U.S.-backed debt to prove it. Tuesday, when the final agreement was reached and the terms were made public, mortgage rates dropped again.

This is because the debt ceiling agreement is based on spending cuts and tax increases. In response, analysts revised lower their respective growth estimates for the United States, benefitting bonds.

By Thursday, markets were in full rally mode.

On the eve of the July jobs report, traders flocked to the ultra-safe bond market; “whispers” put the net jobs created figure at a negative. Wall Street feared the worst. By Thursday’s close, mortgage pricing was at its best levels since November 2010.

Friday morning, though, markets recoiled. When the Non-Farm Payrolls report showed much-better-than-expected growth, it triggered a bond market sell-off and rates reversed higher. Rates rose more Friday than on any single day since November 30, 2010.

If you were quoted a mortgage rate on Thursday, on Friday, the same mortgage rate cost 1 discount point more.

This week, rates may rise or fall — it’s too soon to tell.

Date

Time (ET)

Statistic For

Market Expects

Prior

08/09/11

08:30:00 AM

Productivity-Prel Q2

-0.60%

1.80%

08/09/11

02:15:00 PM

FOMC Rate Decision Aug

0.25%

0.25%

08/10/11

10:00:00 AM

Wholesale Inventories Jun

1.00%

1.80%

08/10/11

02:00:00 PM

Treasury Budget Jul

-$132.0B

-$165.0B

08/11/11

08:30:00 AM

Initial Claims

08/06/11

409K

400K

08/11/11

08:30:00 AM

Trade Balance Jun

-$48.0B

-$50.2B

08/12/11

08:30:00 AM

Retail Sales Jul

0.50%

0.10%

08/12/11

08:30:00 AM

Retail Sales ex-auto Jul

0.20%

0.00%

08/12/11

09:55:00 AM

Mich Sentiment Aug

62.5

63.7

08/12/11

10:00:00 AM

Business Inventories Jun

0.50%

1.00%

 

Friday afternoon, after markets closed, S&P downgraded the long-term debt of the U.S. government a notch. Typically, lower credit ratings means higher borrowing costs which leads to higher mortgage rates, among other things. However, it’s unclear how markets will react to the S&P decision.

Plus, the Federal Open Market Committee meets Tuesday and that, too, can affect markets.

As always, the prudent move is to lock your mortgage rate if its payment and terms are sensible. There’s too much volatility to know what markets might do tomorrow.

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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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