 |
ON THE MARKET
Newsletter Archive
|
Welcome to ON THE MARKET – April 14, 2007
A free newsletter from Hal & Jean Ward, Associate Broker and Sales Associate, Coldwell Banker Preferred Properties. www.centralutahhomes.com
Click here to subscribe.
WHAT’S NEW?
There is a bailout for the mortgage industry who gorged themselves on high risk loans. If there is no solution forthcoming, we could see a major collapse in the housing market.
The current nationwide mortgage crisis is getting lots of attention. Hundreds of thousands of homeowners face foreclosure as their ARM’s reset this year at higher payments. Other borrowers who bought homes with interest only loans a few years ago are facing large increases in their monthly payment.
Everyone is scrambling for a solution that will keep the nation’s housing market, a major driver of the economy, from collapse. The desperate need now is to prevent hundreds of thousands of homes from going to the auction block.
Any solution will mean many new homebuyers will find it more difficult to get credit, and existing homeowners, desperate to refinance, will find themselves unable to qualify for a refinance at tougher qualifying guidelines.
Be prepared to see higher interest rates, stricter qualifying guidelines when applying for future loans. Estimates are that interest rates (now at 6.1) will climb to 6.6 or more, keeping some of us out of the market til prices cycle down a bit.
The best and worst of times are upon us. Depending on whether you are buying or selling, you’ll view the market accordingly. Here is some advice for whatever your situation.
Take heart, there will be better opportunities yet to come. Many buyers jumped quickly into the market and into excessively high priced homes, concerned that the market was going to continue to run away in price. Some even took on a high risk loan to make it happen. It is not a good idea to allow yourself to be frightened into a decision, and as a result, take on a risky loan.
If your better judgment says an interest-only loan, a 50 year mortgage, or an adjustable rate mortgage feels uncomfortable to your financial position, pay attention to your common sense. The current nationwide crisis in mortgage loans and mortgage fraud is all about high risk loans that have proven to be a serious hardship on hundreds of thousands of borrowers.
There is obviously no way to know what home prices will do in the next few years. But good times to buy will come again for you. Some price stabilizing has occurred, but not drastic by any means. While no one expects the bottom to fall out of our local market, all expect some softening of prices as the market reins in on the past excessive upswing in prices.
It is always sensible to analysis your current situation, and find out what the market is really doing. When you hear rumors fly about the sale price of a property, take time to get the actual information from an accurate source. If it was a real estate industry related sale, a real estate agent has access to the correct information. Rumors you hear won’t always be accurate.
If history repeats itself, and it usually does, here’s something to consider: After the last big run-up in house prices, in the 1980s, a long, long slump followed. Sevier valley was in a buyer’s market for years. By the mid 90’s foreclosures dominated our local market. (by the way, foreclosures can be high risk, especially if you try to buy at the auction – we’ll give you more advice on that in a future newsletter)
Nationwide, the 2000 to 2005 boom was even bigger than the ’80s boom. While our local valley market historically never swings so high – and never drops so low as the coastal and metropolitan regions, we usually get drawn into the pool. We’ve just never drowned.
Clearly, there are important benefits to owning a house, beyond financial, like the comfort of knowing you can stay as long as you want or you can fix the roof without permission, remodel and upgrade. Homeownership brings stability to a community, a sense of belonging. It keeps local, state and national economies healthy.
So be patient, be sensible, keep your personal finances in good shape. Avoid high risk loans as if they were the ‘plague’, because they will be for many! Pay attention to the market, it will feel right again. Follow our newsletter, and call us often to stay abreast of changes.
If you own a home and, because of your personal situation or family needs, it makes sense to sell….do it NOW!
Appraisals in this early spring market will reflect the past 6 months of excellent values to keep the value up on your home. But it may not last too long! Current low interest rates are destined to climb. Rates increased this past week, and Freddie Mac expects to see them up to 6.6 before year end.
Preparing your home for sale will be important. Even in a seller’s market, you want your home to stand out in the buyer’s mind. Here are simple, but effective preparations that buyers appreciate, and will keep your home at the top of their list.
Keep it Clean
- Clean sinks, bathrooms before each showing.
- Vacuum rugs and carpets before each showing.
- Wash dirty dishes and put away.
- Empty waste baskets and trash.
- Put away clothes and personal items.
- Organize mail, magazines, and newspapers.
- Fold towels and make beds.
- Eliminate offensive odors from pets or cooking. No smoking in the house when your "on market".
- Keep landscaping neat and mowed. Sweep driveways and sidewalks. Shovel snow.
- Pick up litter on property.
- Clean litter boxes and pet food and water bowls.
- Pick up animal droppings in yard.
Keep it Neutral
- Wherever possible, neutralize the colors in the home.
- Make your home feel light and spacious
- Declutter, declutter, declutter. Make every room feel spacious, by boxing up and moving out everything you don’t need. Store the boxes neatly in one room, or in the garage, or into a storage unit.
- Clean the windows and sills, open the curtains, let natural light in.
Your home is probably your most valuable financial asset. With some preparation and attention, you’ll get the best price in any market.
If paying your mortgage is becoming increasingly more difficult….take steps now and avoid foreclosure.
Banks and mortgage companies do not want to take your home. There's enormous financial pressure on lenders that do foreclose. According to a recent New York Times article, it actually costs a bank an average of $40,000 to foreclose on a loan.
Quoting from a recent article by David Bach ‘The automatic Millionaire’, political pressure is currently being placed on Banks and mortgage companies to "work out this problem." The Federal Reserve, Congress, the Senate, and presidential candidates are all paying attention to the issue of record foreclosures, many of which are a result of adjustable rate mortgages (ARMs) and subprime lending.
Also, agencies like Fannie Mae, Freddie Mac, and the Federal Housing Administration have begun putting pressure on lenders to offer more options to borrowers in trouble. As a result, there will be more help than ever for borrowers to work out a way to stay in their homes.
With that in mind, Mr. Bach offers timely reminders of things you need to know if you or someone you know is having a problem making their mortgage payment:
1. Call your lender immediately.
The single biggest mistake borrowers make when they fall behind on their mortgage is not contacting their lender. As soon as you realize you have a problem, you've got to make that call.
"The sooner the lender is approached, the better," says Tim McGarry, spokesman for Washington Mutual. "Even after one receives a default notice, one should contact the lender and open up discussions." The foreclosure process for most lenders has a set schedule, so the longer you wait the fewer options you'll have.
2. Ask to speak to the "loss mitigation" department.
See if your monthly statement contains the phone number to the lender's loss mitigation department. If not, call the customer service number and ask for that department.
At most lenders, the loss mitigation department helps borrowers determine which workout option they qualify for. Keep in mind, though, that some lenders have their collections departments advise borrowers on workout options, so don't be alarmed if you're sent straight to collections.
3. Be prepared to review your situation in detail with your lender.
Your lender will ask a series of questions to assess your financial situation. Some lenders, like Wells Fargo Home Mortgage, have specialists with both the training and technology to pre-qualify a caller for a workout option right over the phone.
If you have the right financial documents in front of you when you make the call, you might be able to get a resolution within minutes. So organize your bills, statements, and anything else that will help give an accurate picture of your current financial status.
Patrick Carey, senior vice president of Default and Retention Operations at Wells Fargo Home Mortgage, advises borrowers to be completely honest and upfront about their personal financial situation. "You've got to be candid," Carey says. "If you make your situation out to be better than it actually is, you'll get a workout agreement that isn't going to help you, leaving you worse off than where you started from."
On the other hand, he goes on, "If you make your situation out to be more dire than it is, your lender might determine that there's no way for you to afford your payments and may only offer liquidation options."
4. Know the ways your lender can help you avoid foreclosure.
Depending on how serious your situation is, your lender can either offer you retention options (ways to keep your house) or liquidation options (ways to give up your house without going into foreclosure). Specifics for each vary from lender to lender, but here's a general list of what to expect:
Retention options: A 2004 Freddie Mac study showed that retention options could lower the probability of foreclosure by 80 percent among all borrowers and by 68 percent among subprime borrowers. Retention options include:
- Forbearance: Generally lets you pay less than the full amount of your mortgage payment for a temporary period.
- Repayment plan: A form of forbearance where you pay the outstanding amount in installments divided over a period of time.
Avoiding foreclosure is possible, if you educate yourself with your options.
Sign up for free email newsletter about the Central Utah Real Estate market
|
|
|
