Loan Applications Rise as Rates Reach Record Lows.

Loan Applications Rise as Rates Reach Record Lows

More home owners and purchasers took advantage of locking in last week’s record low rates. Mortgage Loan Applications — which include both for refinancing and purchase — rose 2.8 percent for the week ending Sept. 21, the Mortgage Bankers Association reports.

Mortgage Loan Applications for home purchases, an indicator for future home sales, increased 0.7 percent last week. Applications for refinancing rose 3.3 percent, as more home owners tried to trim their monthly mortgage payment by locking in a lower rate.

Mortgage rates last week sank to record lows, following the Federal Reserve’s announcement of more stimulus efforts on the way. The Fed announced it would purchase $40 billion in mortgage-backed securities every month, which is expected to send rates even lower. The 30-year fixed-rate mortgage averaged 3.63 percent, its lowest level on record, according to the MBA.

Source: “Mortgage Applications Rose as Rates Hit New Lows,” NBC News (Sept. 26, 2012)

Home Prices Continue to Rise Over Last Year’s Levels

Home Prices Continue to Rise Over Last Year’s Levels

More housing reports released on Tuesday showed Home Prices Continue to Rise. The Federal Housing Finance Agency reported that U.S. home prices increased 3.7 percent from a year ago in the 12-month period ending in July.

FHFA’s home price index is now at about the same level it was in June 2004. However, it’s 16.4 percent below the peak reached in April 2007. To calculate its housing index, the FHFA uses purchase price data on mortgages owned or guaranteed by Freddie Mac and Fannie Mae.

Also on Tuesday, S&P/Case-Shiller released a report also showing Home Prices Continue to Rise for the fourth consecutive month and at their highest level in nearly two years. S&P/Case-Shiller report measures home prices in 10-city and 20-city composite indices. In its 20-city index, S&P/Case-Shiller reported home prices up 1.2 percent compared to a year earlier.

“The news that Home Prices Continue to Rise in this report confirm recent good news about housing,” David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, told The Wall Street Journal. “Single family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing. All in all, we are more optimistic about housing.”

Last week, NAR reported that the median price on existing-homes rose 9.5 percent over year ago levels. The median home price in August is $187,400.

The increase to the sales price in August was the strongest since January 2006 when median home prices had risen 10.2 percent higher than what they were a year ago.

The National Association of REALTORS® will release its pending home sales report on Thursday.

Source: “FHFA Home Price Index Now Equals 2004 Levels,” HousingWire (Sept. 25, 2012) and “Case-Shiller Shows Home Prices Rise Sharply Again,” The Wall Street Journal (Sept. 25, 2012)

Credit Scores Can Differ From What Lenders Use

Credit Scores Can Differ From What Lenders Use

When reviewing their credit scores, one in five consumers are likely to receive a different credit score from what a creditor will use to price a loan, according to the Consumer Financial Protection Bureau. The discrepancy has the agency concerned.

Lenders use credit scores to help determine the interest rate they’ll charge customers—with higher credit scores often receiving the best rates.

“Many consumers incorrectly believe that the scores they purchase are the same ones used by lenders,” according to a CFPB report. As such, a “substantial minority” of consumers are at risk of overpaying for credit or in applying for loans that they’re ineligible for.

Even the slightest variation in credit scores can make a big difference and has the potential to hamper a person’s chances for qualifying for certain kinds of home loans, according to the CFPB.

The CFPB sites FICO scores, which are widely used by lenders, as having different credit scoring models for lenders and consumers that can vary. VantageScore also has different types of credit scores, CFPB says.

CFPB is evaluating the accuracy that credit reporting firms provide to consumers.  It encourages consumers that when they review their credit reports to focus not on credit scores but to check the accuracy of the payment history on the reports because the firms use that to calculate scores. Consumers should take steps to correct any errors they find on the payment history of their reports because it can help improve their scores, CFPB notes.

Source: “Regulator Sees Flaws in Credit-Score Information,” The Wall Street Journal (Sept. 25, 2012)

How to Avoid Common Closing Snafus

How to Avoid Common Closing Snafus

Closing delays have reportedly been a rising problem in the real estate industry, from properties not appraising at the agreed upon selling price to financing problems.

Columnist Dirk Zeller, a real estate author and sales coach, says that documentation and verification is a common sticking point at closing.

“Lenders [need] to assemble considerable paperwork and complete dozens of documents based on information submitted by the loan applicants,” he writes in a column for Realty Times. “The document preparation and information verification process takes time. Counsel your buyers that if they fail to submit the required information on a timely basis, or if they turn it in piecemeal and bit-by-bit, delays are certain to result.”

Repairs can be another sticking point at Closing. That’s why Zeller recommends that when agents represent a seller they include in writing that only “lender-required repairs” will be completed. This will help prevent buyers from coming back with a long checklist of items that they want repaired.

“A lender-required note at Closing usually limits repairs to structural, mechanical, or health and safety issues—with not a word about nicks in a walls or non-matching door knobs,” Zeller writes.

Source: “Avoiding Closing Derailment,” Realty Times (Sept. 24, 2012)

Housing recovery… A good week for it!

Housing recovery… A good week for it!

The housing recovery showed signs of strengthening this week, as two new reports showed home sales and prices on the upswing.

Existing-home sales have soared nearly 8 percent from a year ago, the National Association of REALTORS® reported this week proving the Housing recovery is on the upswing. Meanwhile, the new-home market also is showing signs of recovery, with starts rising 29.1 percent over year-ago levels, according to the Census Bureau.

What’s more, home builders are getting more confident about the Housing recovery market with recent sales, future sales, and buyer traffic. Home builder confidence reached its highest level since the housing-boom time of June 2006, according to this month’s index of home builder sentiment.

Also this week, fixed-rate mortgages this week were at all-time record lows or near it, helping to keep home buyer affordability high, Freddie Mac reported in its weekly mortgage market survey.

With a drop in inventory of for-sale homes nationwide, many markets are also seeing an increase in home prices. The median home price is $187,400, a 9.5 percent increase over year-ago levels. Also, “that marked the sixth consecutive month of price increases, the first time that has happened since May 2006, near the very peak of the housing price boom,” CNNMoney reports.

“We have a real housing recovery taking root, and that has positive implications for the broader economy,” Sal Guatieri, senior economist at BMO Capital Markets, told the Associated Press. “If home prices continue to rise, so, too, will household wealth and consumer confidence.”

Source: “Housing Recovery Blossoms,” CNNMoney (Sept. 19, 2012) and “Housing Recovery Stirs in August,” Associated Press (Sept. 19, 2012)

Home Buyers Canceling Contracts?

Home Buyers Canceling Contracts?

With a high number of Home Buyers Canceling Contracts, even as the housing market picks up and sales are on a rise, new data from Capital Economics shows. Nearly 18 percent of signed contracts on existing home sales were canceled from May through July.

What’s more, 36 percent of real estate professionals say they’ve experienced a problem with Home Buyers Canceling Contracts, whether that be a delay, negotiations on the sales term, or a cancellation of the contract, according to the National Association of REALTORS®.

What’s leading to the high number of Home Buyers Canceling Contracts?

For one, some are blaming tight lending requirements for causing more contract cancellations. More buyers find that as they inch toward closing that they’re unable to get the financing approved for their home purchase or are facing major delays from obtaining a mortgage.

Some analysts blame the high number of Home Buyers Canceling Contracts on the limited inventory of homes for-sale on the market. The limited inventory is prompting some buyers to aggressively bid on a property in order to get a seller’s attention. However, after getting the “winning” offer, these buyers reevaluate how much they truly wanted the home in the first place, Bryan Sweeley with ZipRealty in Santa Clara, Calif., told MarketWatch. In those cases, if a home inspection or appraisal reveal any any potential snafu, the buyer may be prompted to walk away from the deal.

Still, Capital Economics notes: Just because a buyer cancels a contract to buy a house doesn’t mean they’re walking away from the housing market altogether. They may then go on to make an offer on another home, or it may be just renegotiating in a new contract on the same property.

Source: “Canceled Contracts Dog Real Estate Recovery,” MarketWatch (Sept. 19, 2012)

Home building Bounces Back in August.

Home building Bounces Back in August.

Home building Bounces Back for single-family homes was at its fastest pace in more than two years during August, as the new-home market continues on in recovery mode.

The Commerce Department reported Wednesday that single-family housing starts soared 5.5 percent, marking the best pace since April 2010. Construction of homes and apartments increased 2.3 percent in August from July.

Overall, Home building Bounces Back to nearly 60 percent since April 2009, when it hit a recessionary low, the Commerce Department reports. Still, the sector is only at half the pace that most economists consider healthy.

Apartment construction has been a volatile part of the market in recent years and construction dropped nearly 5 percent in August.

Home building Bounces Back — for both homes and apartments — rose the most in the Midwest, which saw a 20.7 percent monthly increase in construction. Home construction also increased 3.7 percent in the South, but dropped 12.6 percent in the Northeast and 4.3 percent in the West.

Building permits, a gauge of future construction, dropped to an annual rate of 803,000, down from a four-year high of 811,000 in July.

Source: “U.S. Housing Starts Rose 2.3 Percent in August, Buoyed by Single-Family Construction,” Associated Press (Sept. 19, 2012)