Sunday, April 26, 2009

Finding the Best Mortgage Deal Takes Work

Home buyers who investigate mortgage options themselves as opposed to using a broker are likelier to get a better deal, according to a study for the Department of Housing and Urban Development published last year.

The study found that borrowers paid about $300 to $425 more in fees when they worked with a broker as opposed to working directly with a lender.

But comparison shopping can be tricky. Home buyers should try to devote a whole day to comparison shopping and include at least one credit union, a community bank, multiple national banks and an investment firms.

They should compare one type of loan at a time--for instance, a 30-year, fixed rate with no points. Their research should include a request for a guarantee that both the rate and the good-faith estimate will be exactly as initially presented. This standard could be difficult for a buyer to find, but it’s worth trying to find it, experts say.

Source: The New York Times, Ron Lieber (04/04/2009)

10 Happiest States in the U.S.

Money can’t buy happiness, but it can make life a whole lot easier.’s Happiness Index examined household income, debt, employment, and foreclosures to choose the states that are surviving the current economic crisis with the most panache.

The analysis discovered that despite disastrous conditions in parts of Michigan and Ohio, overall, the Midwest is navigating the financial meltdown with the highest average salaries, lowest unemployment, and fewest foreclosures. In fact, Nebraska, in the center of the corn belt, scores highest on MainStreet’s Happiness Index.

Here are the rest of the top-10 happiest states:

  1. Nebraska
  2. Iowa
  3. Kansas
  4. Hawaii
  5. Louisiana
  6. Oklahoma
  7. Wyoming
  8. South Dakota
  9. West Virginia
  10. Wisconsin

Source:, Stephen Dalton (04/06/2009)

10 Riskiest U.S. Housing Markets

Even with hints of a housing recovery in some places, risky markets, dominated by nonprime mortgages, still prevail in a number of areas.

Forbes magazine and Moody’s surveyed the 200 largest metropolitan areas, adding up the number of loans to low-rated borrowers and dividing that sum by the total number of mortgages to calculate the percentage of each area’s market that is below prime.

Here are the 10 metro areas with the highest percentages of nonprime mortgages, which makes them susceptible to defaults as unemployment rates continue to rise.

  • Mission, Texas
  • Detroit
  • Miami
  • Brownsville, Texas
  • Merced, Calif.
  • Lakeland, Fla.
  • Bakersfield, Calif.
  • Fort Lauderdale, Fla.
  • San Bernardino, Calif.
  • Visalia, Calif.

Source: Forbes, Maha Atal (03/31/2009)

Saturday, April 18, 2009

When should you Refinance? --Obama Urges Americans to Refinance

President Obama urged Americans to take advance of the administration’s new program, which allows homeowners whose loans are underwater to refinance.

Obama, who spoke Thursday at a White House event, pointed to historically low interest rates and estimated that if 7 million to 9 million homeowners refinance, they will save $1,600 to $2,000 a year.

"That is money in their pocket," Obama said. "We are at a time where people can really take advantage of this, and what we want to do is to send a message that if you are having problems with your mortgage – and even if you're not, and you just want to save some money – you can go to"

Source: The Wall Street Journal, John D. McKinnon (04/09/2009

When will the Housing Market Recover? Not This Year, Experts Say

One in every nine homes in the United States is sitting vacant, according to the U.S. Census Bureau. Economists predict that getting rid of this glut nationwide will take at least three years.

Here’s the math: The number of housing units in the United States increased by 8.65 million from 2002 to 2007. During that period, the number of U.S. households rose by only 6.7 million. Subtract a half-million homes that will be torn down or lost to fire, and that leaves an excess of 1.3 million units, not including vacation homes.

The country adds about 1.5 million households every year, but the recession and a slowdown in immigration is reducing that number. Additionally, Gen Xers, most of who are within the age range when people tend to have the most children, are relatively small in number and won’t create an enormous need for larger living space.

Factor in the number of new homes being built—about 700,000 this year, according to Arthur C. Nelson, director of the University of Utah’s Metropolitan Research Center— and the bottom line is a multi-year recovery.

As Robert Lang, head of the Metropolitan Institute at Virginia Tech, puts it, "Population is still growing, and sooner or later, you'll want to move out of relatives' basements."

Utah’s Nelson analyzed government and private housing data and predicts that hard-hit housing markets in the West and South will start to bounce back later this year and during the first half of 2010. The Northeast and Midwest will have the slowest comeback, possibly extending beyond 2012, he says.

Source: USA Today, Hava El Nasser (09/10/2009)

Sunday, April 12, 2009

Banks Move Back Into Jumbo Lending

Major banks are spotting opportunities and getting back into the business of making jumbo loans.

Bank of America, the country’s largest mortgage lender since it acquired Countrywide, has renamed its lending arm Banking of America Home Loans and is rolling out a program to finance loans between $730,000 and $1.5 million.

“There’s a real need for loans of this size," says Barbara Desire, who heads consumer real estate operations.

Other lenders moving into this space include ING Group, Amsterdam-based banking and insurance conglomerate, which will offer jumbos as large as $2 million through ING Direct.

Source: Washington Post Writers Group, Kenneth R. Harney (03/21/2009)

Saturday, April 11, 2009

Get the Best Refinance Deal!

Mortgage rates are lower than 5% - but how can you get the best refinancing deal?

Everyone has been asking me about how to secure these low, low mortgage rates. And many people are having a hard time even getting through to their lender on the phone. They're pretty frustrated.

I spoke with the chief economist of Fannie Mae yesterday. He told me it will take as much as three months for the mortgage industry to start working at full capacity. His full year outlook for mortgage rates is 4.8 to 5%. The takeaway here: Be patient - there will be lines.

1. Recognize opportunity

Look - there is opportunity here. 30-year fixed mortgage rates are at 4.6%. Historically, that rate is 8%. And that is significant.

Let's take a look. 30-year fixed mortgage rates are at 4.6%. If you took out a 30-year fixed loan of $170, 300 (the average cost of a home) at 5%, your monthly payments would be around $915. And at 8% you would pay $1,250. The savings? $335 dollars a month or $4,000 dollars a year.

2. Be wary

We've told you it might take longer to get a refinance now. And that's something to be aware of. And according to, Fannie Mae and Freddie Mac have increased their fees.

So you could be paying extra fees of 1% or 2% of the loan amount, and sometimes even higher on top of all other closing costs.

3. Get the best rates

Having enough equity is one of the biggest obstacles. These days you'll need at least 20% equity to get the best rates.

Make sure you keep your credit score as high as possible. Get copies of your credit report to make sure there are no errors at

Shop around to get the best rate. Get all your paperwork together now.

Here's a list of what you'll need to start collecting: Your refinance application, two years of tax returns, one month of paystubs, three months of asset statements (checking, savings, mutual funds), your most recent mortgage statement and a copy of the deed.

Source: CNN, Gerri Willis (March 25, 2009)

Save the Mortgage Interest Deduction!

“Our initial analysis of your budget proposal forecasts home price declines and added damage to the broader economy because of reduced consumer spending, additional increases in foreclosures and additional increases in joblessness.”

February 26, 2009, Letter to President Obama

Charles McMillan, CIPS, GRI

2009 President, National Association of REALTORS®

Top Economists See Recovery Very Differently

Several economic experts offered Newsweek their opinions about the state of the economy. Here are four of their viewpoints in a nutshell:

1. Allan Meltz, professor at Carnegie Mellon’s Tepper School of Business and a historian of the Federal Reserve: “The economy would benefit if the government offered a tax credit to anyone who buys an existing house in the next two years — a broader program than the one they’ve passed, which offers a credit only to first-time homebuyers this year.”

2. Larry Lindsey, CEO of the Lindsey Group and former governor of the Federal Reserve: “Private-sector job creation will be sluggish. Prices in the government-subsidized and -controlled sectors of the economy, like education and health care, will continue rising. Meanwhile, both real wages and profit margins in the private economy will be shrinking. This means that the near-term spate of good economic news is probably just a false dawn.”

3. Jeremy J. Siegel, professor of finance at the Wharton School of the University of Pennsylvania: “There are definitely reasons for optimism. Mortgage rates have come down to near-record-low levels. Furthermore, some of the data on economic activity has recently begun to stabilize, such as retail sales, consumer sentiment and housing. While none of these variables is remotely ‘robust,’ they are no longer spiraling downward as they had over the past six months.”

4. Bill George, professor, Harvard Business School, and former chair and CEO of Medtronic: “The economy is going to get worse before it gets better, so optimists shouldn’t play up stabilization until the economy finds its bottom. There are many layoffs ahead that will swell the unemployment rolls. Eventually, the massive amounts of money the government is pumping into the economy will take hold and the economy will gradually begin to turn upward again, but this won’t happen until the end of 2009 at the earliest.”

Source: Newsweek (04/06/2009)

Tuesday, April 7, 2009

Top 10 Most Heavily Taxed States

It’s April, so people’s thoughts are turning to taxes, and where they live makes a big difference in how much they pay.

Here are the 10 states with the highest taxes, including property, individual income, sales, alcoholic beverages, tobacco, motor vehicles, hunting and fishing, motor fuels, death and gift taxes, as well as insurance premiums. The per capita tax was derived by adding up all the taxes and dividing the total by the number of citizens.

1. Vermont, $3,861
2. Hawaii, $3,856
3. Connecticut, $3,596
4. Minnesota, $3,203
5. New Jersey, $3,024
6. New York, $3,019
7. Massachusetts, $2,953
8. Washington, $2,553
9. Wyoming, $2,357
10. Pennsylvania, $2,223

Source: Forbes, Matt Woolsey (03/30/2009)

6 Reasons Why It's Still a Good Time to Buy

The housing market is looking healthier. Here are six reasons why now is the time to jump into the market.

1. Uncle Sam is willing to help. First-time buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum $8,000 tax credit; interest rates are at record lows; and the Federal Reserve is doing its best to make mortgage loans available.

2. People have to live somewhere. About 800,000 new households are formed each year in this country, ensuring that the housing market will tighten, even if the economy doesn’t soar.

3. Borrowers leverage their investment. If you put $10,000 into the stock market and it earns 10 percent, you’ve earned $1,000. If you put $10,000 down on a home and its values increases 10 percent, you’ve made $10,000.

4. When prices come back up, you’ll have instant equity. In parts of the country where foreclosures have driven down prices, better times will mean the price of the home you buy will rise rapidly.

5. Mortgage costs stay the same. If you get a fixed-rate mortgage, the monthly payment stays the same – while everything else, including rent, goes upward.

6. You own it. There is something comforting in the notion that your home is your own. You can paint it any color you want, let the dog run in the back yard and hang a swing for the kids in the front.

Source: The Wall Street Journal, June Fletcher (03/27/2009)