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Do You Qualify For The Obama Refi Plan?
June 2009

By Marcie Geffner, Bankrate.com

The federal government's Home Affordable Refinance program is designed to help homeowners refinance their mortgages even if they owe slightly more than the current value of their homes. The program could be a boon for some borrowers, though its many layers of rules may resemble one of those maddeningly complex contests that offer valuable prizes to people who complete a maze of special offers.

The program is complicated because the federal government has a top-level set of rules; Fannie Mae and Freddie Mac have their own separate sets of rules; and lenders, loan servicers and mortgage insurers generally have their own rules as well. View the full article to see a summary of some of the guidelines.

Nearly a dozen lenders have signed formal agreements to participate in this program. A list of these lenders has been posted on the Making Home Affordable Web site. Other lenders may also offer this program, so be sure to check with your preferred lender if they are not on this list.

Borrowers are encouraged to gather documents before they contact a lender or loan servicer. Recommended documents include:
1. Paycheck stubs or other income-related documents.
2. Recent income tax return.
3. Information about any second loan secured by the property.
4. Account balances and monthly minimum payments on credit cards, student loans, car loans and other debts.

Borrowers are also encouraged to complete the short self-assessment questionnaire to obtain a preliminary indication of whether they may be eligible for this program.

The program will end June 10, 2010, unless the deadline is extended.

More information may be found at Making Home Affordable.

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Don't Wave Your Dream Home Goodbye: Beware Of These Credit Report Red Flags
May 11, 2009

By Janene Mascarella
AOL Real Estate

On the hunt for a new home? While your overall credit score is a good snapshot of who you are as a borrower, getting a mortgage is more than just crunching numbers a computer kicks out -- lenders will be going over your credit report with a fine-tooth comb.

According to Seth Asher Rabinowitz, CEO of MyLoanMarket.com, many homebuyers aren't even aware of the "human review" component of a loan underwriter. It is this person's job to look for derogatory entries in your credit report that a computer may not weigh as heavily. Here are some of those red flags that can stick out and lower your home-buying power.

You're Maxed Out
A credit score under 740 can cost hundreds if not thousands of dollars at the time of application in fees and/or higher interest expense over the life of the loan, says Jay Dacey, a mortgage planner with MN Real Estate Loans in the Twin Cities. If your zero percent credit cards are maxed out, it is nearly impossible to stay over that 740 mark even if you've never been late on a payment. The moral of the story: Don't trip over nickels to pick up pennies, says Dacey. Having zero percent on your TV, laptop, or couch so you can make one percent on your savings account is not worth it when you go to get a mortgage and pay through the teeth because you thought you were "sticking it to the bank" on your zero percent card.

You're Not Quite Credit-Worthy
Late payments speak volumes on your credit report. While a "late" is reflected in your overall score and indicated when a reviewer looks at all the accounts, all late payments are not created equal, says Rabinowitz. A late to a cell phone carrier isn't as alarming as a mortgage late, but a mortgage late takes the prize for being the biggest and brightest glowing red flag. Consequences for lates, such as "in default," "serious delinquency," and "foreclosure," are visible to anyone reading your credit report. Each of these categorizations would be serious red flags and more than likely eliminate the possibility of a traditional lender or bank making a mortgage loan in these troubled times, says Rabinowitz.

You Owe Uncle Sam
Lesser-known red flags on a credit report are real estate tax liens from the federal or your state/local government, says Rabinowitz. Lending underwriters might ask themselves, "Well, if this potential borrower can't pay the tax bill on the previous property, how can we safely extend credit on a new one?" Rabinowitz's advice: Verify that the tax lien on your report is, in fact, not a mistake, as many are. If it is an error, seek help to get it removed through the process, or research how to do it on your own. If it's not an error, you'll have no choice but to pay off the tax lien. If you can't wait for it to come off the report "naturally," proactively try to get it removed.

You've Bottomed Out
Sure, it looks bad in the eyes of a lender to have legally declared yourself financially insolvent, but a bankruptcy doesn't necessarily reduce your home-owning hopes to rubble. "Bankruptcies on a credit report do have impact for up to 10 years," says Eric T. Mitchell, managing partner of National Credit Associates in Sherman Oaks, California. "However, FHA loans allow for a new mortgage once the bankruptcy has been discharged for two years." They will even allow a new mortgage one year after a bankruptcy if it was caused by a hardship as opposed to financial mismanagement. Even better, FHA allows for a new mortgage for people still in a Chapter 13 bankruptcy as long as the most recent 12 months trustee payments have been timely made. There's a 3.5 percent down payment and you only need to display that you can truly afford the monthly payments. Fannie Mae and Freddie Mac do require the bankruptcy to be discharged up to five years to be considered for new financing.

You're Overdue
More non-traditional items are showing up on credit reports, says Rodney Anderson, a mortgage and credit expert from Plano, Texas. These days, it's not just traditional creditors and medical organizations that are reporting past due and collection accounts. Municipalities are also reporting overdue fees and fines to the credit bureaus for unpaid items like parking tickets and even past due library accounts. The best thing borrowers can do is find out what their credit reports say prior to entering a transaction. Becoming aware of your credit situation puts you in the position of control.

Your Happy Ending
This is a great time to buy a house, says certified financial planner, Christine D Moriarty, president of MoneyPeace, Inc. Despite your red flags you can own a new home, as long as you're armed with the facts about your finances and committed to making the necessary changes. "I usually tell couples to start to prepare for the house hunt and mortgage search a year beforehand," says Moriarty. So the faster you find the potential red flags on your credit report, the longer you have to correct them and clear the way to a happy closing.

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Discounts are Attracting Home Buyers Into Market
GACAR President Craig McCall is "cautiously optimistic" about signs that point to increased sales, including 170 pending contracts on homes and 25 on condos since January that have yet to close.
March 24, 2009

By Anthony Clark
Business Editor, The Gainesville Sun

Home sales were driven by deep discounts on foreclosures and other distressed sales in February as sales of existing single-family homes were up in Florida and the U.S., but were down in Gainesville where the increase in foreclosures and price declines has not been as steep.

Sales of existing single-family homes were down 25 percent in the Gainesville metropolitan statistical area in February compared to a year ago with 106 sales, according to the Florida Association of Realtors. The median sales price was down 23 percent to $136,000 from $176,400.

Sales, however, were up compared with January, when 73 homes sold with a median price of $183,300.

The Gainesville MSA consists of Alachua and Gilchrist counties.

The big drop in median prices from a month prior could be the result of as few as 10 short sales, according to Craig McCall of Prudential Preferred Properties and president of the Gainesville-Alachua County Association of Realtors. In a short sale, the bank agrees to take less than the amount still owed on the mortgage.

Michelle Bacon sold her Haile Plantation condominium in a short sale after it had been on the market for a year and a half so she could move to West Palm Beach.

Bacon had already lowered her asking price three times - from $175,000 to $135,000 - and even offered to throw in her 2001 Saturn SC1, but had no takers. After negotiating with the bank for several months, she finally sold the condo for $115,000 in January after paying $174,000 in January 2006.

As for the car, "I'm still putting around in it," she said. "Without paying for the mortgage anymore, it's about time to get a new one."

Florida sales were up 20 percent year-over-year in February while the median price was down 29 percent to $141,900. It was the sixth consecutive month of year-over-year sales increases. Sales were up 16.7 percent since January.

Sales increases were greatest in some of the markets with the steepest price declines.

Compared to Gainesville, only Tallahassee had slower sales in homes and existing condominiums in February. Home sales were down 37 percent in Tallahassee and condo sales down 83 percent.

In Gainesville, condo sales were down 61 percent, from 31 to 12, and the median price down 5 percent to $128,000. Statewide condo sales were up 15 percent while the median price was down 37 percent to $109,300.

University towns are starting to see the effect of state budget cuts, which lags behind the rest of the economy, according to Wayne Archer, director of the University of Florida Bergstrom Center for Real Estate Studies.

Gainesville also doesn't have many foreclosed houses to sell, he said.

McCall said he is "cautiously optimistic" about signs that point to increased sales, including 170 pending contracts on homes and 25 on condos since January that have yet to close, he said.

He said lower prices and interest rates are bringing out a lot more lookers.

Home shoppers are telling him that they're now able to afford homes in neighborhoods they couldn't afford a year ago. He said he's also seeing more people getting prequalified for a loan.

"That means they anticipate making an offer pretty soon on something," McCall said.

He also anticipates more first-time buyers because of the new $8,000 tax credit.

The economic stimulus isn't likely to show in home sales before summer, but lower mortgage rates may be a factor earlier, according to Lawrence Yun, chief economist with the National Association of Realtors.

U.S. sales jumped by the largest amount since July 2003, with a 5.1 percent increase from January to February, according to the NAR, attributed to first-time buyers buying discounted properties, The Associated Press reported.

About 45 percent of sales are foreclosures or other distressed sales, according to the NAR.

The median price was down 15.5 percent to $165,400 from $195,800 a year ago, the second-largest drop on record.

Prices are anticipated to fall well into the year. Many foreclosures are not yet on the market and many would-be sellers are staying off the market to avoid competing with foreclosures, the NAR reports.

See Posted Article >>>

Deal or No Deal
Wait for Bargains on These 5 Items? Buy Now?
February 27, 2009

By Jay MacDonald
Bankrate

What's it going to be, America: deal or no deal?

With the economy in free-fall, consumers have been holding their breath -- and their cash -- as they delay major purchases while waiting for the economic turbulence to pass.

When buyers won't buy, sellers can't sell. When this happens, credit dries up, businesses shut down and joblessness grows, stalling the engine that drives our economy.

"We are going to see, over the next six months, a fundamental shift in the American retail landscape," says Paco Underhill, retail anthropologist and author of "Why We Buy: The Science of Shopping."

"Almost every major chain would be so much healthier if they shed underperforming properties. We are over-stored."

While the downturn is devastating for retailers, it offers several silver linings for shoppers -- fire sale prices, desperate retailers and historically low interest rates -- that have them wondering if they should hold off on purchases.

Should you buy today or wait for greater savings tomorrow? Or in the parlance of a popular TV game show, is it going to be "deal or no deal?"

Fast Changes

The question is not whether you'll get a better deal by waiting six months; it's also whether the retailer will still be around by then.

"We're in the worst consumer spending slump in decades, and there's a lot of debt by retailers," says Tom Kelly, director of the Center for Business and Economic Research at Baylor University in Waco, Texas.

"I think we'll see a lot of bankruptcy filings, and even difficulty getting enough capital to even reorganize under bankruptcy. If the economy continues to slow down and unemployment keeps going up, this will obviously injure consumer spending."

Right now, a buyer's market rages in almost every retail sector. Buyers gain clout when supply exceeds demand. How long this will last is anyone's guess.

Once your neighbors decide to spend instead of save, demand will rise, taking away some of your leverage.

But before you rush out and buy, remember that prices could just as easily drop next week. New features could be added, "bundled," to sweeten the deal. More attractive financing terms could appear at any time.

We surveyed some experts in a few big-ticket sectors for their advice on whether to buy now or hold out for even greater savings.

1. Airfares: Deal or No Deal?

No deal. Tom Parsons, publisher of the Bestfares.com travel site, hasn't seen this much airfare turbulence since post-9/11.

The one-two punch of skyrocketing fuel prices last summer followed by the crash of the economy last fall left the airline industry in a tailspin, much to the financial good fortune of air travelers.

Airlines initially cut routes in anticipation that higher fuel charges would put ticket prices beyond the reach of the lunch-toters. But once the economy tanked, all air travel, including business class, dropped off sharply.

"The airline industry right now is bargain basement," Parsons says. "I don't see the fares going up. If anything, you have a fair shot for the fare to come down."

Gazing ahead to the prime summer travel months, Parsons sees nothing but miles and miles of bargains, especially to or from hubs served by low-cost domestic carriers such as Southwest, JetBlue, AirTran, Virgin America, Frontier or Spirit. These will likely set the price points that legacy carriers like United and Delta/Northwest will be forced to match.

"If you're trying to buy for peak summer, July and August, and you're flying a route served by Southwest, I would suggest not buying yet," he says.

That said, Southwest is one of the few airlines that will refund 100 percent of your ticket price if the price drops -- good insurance in turbulent times.

The sky is the limit for bargains on international routes as well, says Parsons. Bestfares.com recently finished selling roundtrip flights from Dallas or Houston to London on British Airways for $449. The same flight on American Airlines costs $1,081.

If you're willing to consider other European gateways or seek out special introductory fares, the savings can be even greater.

"If you're going to Europe, I would just sit back and watch the prices. Especially summer; summer is just priced very high right now and I think the airlines are going to have to blink," says Parsons.

2. Vehicles: Deal or No Deal?

Deal. When the Big Three automakers have been reduced to punch lines for Letterman and Leno, there's little doubt that their products have become seriously shopworn. There's nothing like asking for a huge bailout to stop the flow of buyers onto your lot.

A team of auto analysts recently reported the average price of a new vehicle fell 2.3 percent in the second quarter of 2008, the largest single drop in the 41-year history of the survey. Analysts expect rock-bottom pricing to continue at least through the first half of this year.

"Automobile dealers are screaming," Kelly says. "They have inventories they can't get rid of and are scrambling with all sorts of efforts to sell them. I don't see that recovering anytime soon, at least through the first half of the year."

Need a new vehicle? You'll be able to drive a hard bargain, now or later.

3. Home Purchase: Deal or No Deal?

DEAL. If you are contemplating buying a home, now may be the perfect time to make a purchase -- if you have the money and a secure job.

Real estate sales have sagged in many parts of the country as buyers have been frozen in the headlights of the economic downturn. As a result, prices are falling in many markets.

"If I could buy real estate right now, I would," says Amy Bonis, a certified mortgage planner with Alera Financial in Raleigh, N.C. "It's clearly a buyer's market. If you can buy a house that is undervalued, it's like, what shade of green do you want?"

In addition, mortgage rates have fallen near historic lows, substantially reducing the cost of financing for buyers with good credit.

Bonis says buyers who act now rather than wait are likely to see the best return.

"Somebody has to start buying, and when they do, there are going to be more buyers on the market, which is going to cause home prices to go up," she says. "When you stimulate home prices to go up, that affects the economy in a positive way, which raises interest rates. What people don't realize is, by the time they hear that things are better, (their opportunity) is already gone."

4. Mortgage Refinance: Deal or No Deal?

No deal (sort of). It may be a great time to buy a home, but it's no time to rush into a refinance on the hope of quickly capturing a great rate, Bonis says. Instead, it pays to take your time and do things right.

Bonis tells her refinance clients "absolutely do not lock" on a rate until they have their paperwork ready and approved.

Why? Bonis says the window to lock in an attractive mortgage rate has shrunk from four-plus hours to two in the past 12 months, due to the volatility in the bond market that feeds those rates.

"It's incredibly stressful because, when you go to lock a loan, the lock desks become frozen because there is so much volume; they actually stop accepting locks," she says. "I had a customer who wanted 4.5 percent. Well, I could have gotten him 4.6, but he said, 'No, Amy, I'm going to hold out.'

"Well, excellent -- now it's four and seven-eighths."

The best way to refinance today is to hurry up and get your paperwork prepared and approved, then wait.

"We get everything approved and then we wait for that two-hour window, and when that happens, we're going to lock in those people who have already gotten us all the papers," she says. "We don't charge them a dime until we get them the loan rate that makes sense to refinance on."

5. 'Netbook' Computers: Deal or No Deal?

No deal. In the world of mobile computing, there's a new kid in town: the "netbook," a pocketbook powerhouse with a miniature keypad and a 10-inch screen that's perfect for surfing the Web and catching up with e-mails on the fly.

Mika Kitagawa, principal analyst with Gartner, a technology research company, says netbooks have been eating into notebook sales since they hit store shelves last year.

"Yes, there is cannibalization," she says. "Netbooks are actually opening up a market for new customers who would like to have a smaller system to carry around."

Netbooks were a bright spot in an otherwise dismal holiday shopping season for computer makers.

Kitagawa says the netbook, which retails as low as $299, doubtless contributed to a significant decline in notebook prices during the third and fourth quarters of 2008, bringing low-end, 15-inch models down to between $399 and $599.

"Those low-priced systems put a lot of pressure on the price of regular notebooks, which have to somehow compete with the netbooks," she says.

Should you grab one now, on sale at $259 at several big-box stores?

Kitagawa says no. "These could go down in price a little further, to the $199 range, depending on the functionality and operating system," she says.

By waiting a few months, you'll likely not only save a few bucks, but also may get a more robust machine.

"It really depends on how much vendors want to do to sell more of this product," she says.

See Posted Yahoo Finance News Article >>>

Pending Home Sales on the Rebound
Biggest increase is seen in the South and Midwest
February 4, 2009

By ALAN ZIBEL
AP Real Estate Writer

WASHINGTON (AP) -- An index that tracks signed contracts to purchase existing homes rebounded in December, as buyers snapped up properties at deep discounts, especially in the South and Midwest.

It was the second positive sign in the past two weeks for the troubled U.S. housing market, and may indicate that a bottom is forming - at least for home sales. Analysts, however, caution that prices are likely to keep falling through 2009, and say the outlook for home sales is highly uncertain, especially as layoffs mount.

The National Association of Realtors said Tuesday its seasonally adjusted index of pending sales for previously owned homes for December rose 6.3 percent to 87.7 from an upwardly revised November reading of 82.5, which was lowest month on record. That's better than the 82.3 reading economists expected, according to a survey by Thomson Reuters.

The reading also was up 2.1 percent from December 2007.

Typically there is a one- to two-month lag between a contract and a done deal. Home sales that were pending in December are likely to be completed in the coming weeks.

After the stock market crashed last fall, sales of existing homes plunged in October and November, but recovered in December. Tuesday's pending home sales report indicates January sales data, to be released later this month, may look good too.

Pending home sales increased about 13 percent in the South and Midwest, but fell almost 4 percent in the West and about 2 percent in the Northeast.

See Posted New York Times Article >>>

Home Sales Better Than Expected in December
January 26, 2009

By THE ASSOCIATED PRESS

WASHINGTON — Sales of existing homes posted an unexpected increase last month, closing out the worst year for the real estate market in more than a decade.

The National Association of Realtors said Monday that sales of existing homes rose 6.5 percent to an annual rate of 4.74 million in December, from a downwardly revised pace of 4.45 million in November.

The results were better than expected. December’s sales had been forecasted to fall to a pace of 4.4 million units, according to Thomson Reuters.

Buyers were taking advantage of dramatically lower prices, especially in distressed markets like California, Florida and Nevada, where foreclosures have swamped the market.

The nationwide median sales price plunged to $175,400, down 15.3 percent from $207,000 a year ago. That was the lowest price since May 2003 and the biggest year-over-year drop on records going back to 1968.

“The economy just simply cannot recover as long as home prices continue to decline,” said Lawrence Yun, the trade group’s chief economist, who called on lawmakers to include tax credits for home buyers in the economic recovery package being considered by Congress.

For all of 2008, there were 4.9 million existing home sales, down more than 13 percent from a year earlier, and the lowest total since 1997.

And another encouraging sign — the number of unsold homes on the market in last month fell nearly 12 percent to 3.7 million. At the current sales pace, it would take 9.3 months to sell all the properties, down from 11.2 months in November.

See Posted New York Times Article >>>