Nervous Home Buyers May Miss Their Chance at Cashing in

Is now the right time to get into the housing market? That’s what many people are asking themselves. With the price of real estate falling on a daily basis and more and more homes going into foreclosure, the future is looking bright for people who couldn’t afford to buy a house when the market was more favorable for sellers. While it is true that many mortgage lenders out there have either decided to stop giving out new mortgage loans or tightening up their qualifications for a mortgage loan, there are still mortgage lenders out there who are willing and able to take a chance on a qualified buyer.


The key word there is qualified. You probably won’t find those no down payment loans, or interest only loans anymore, mortgage lenders are already taking a bath on those. But the truth is that those should never have been offered in the first place. Because of the creative and sneaky financing that was going on during the first part of the new millennium, the housing market is in a sour tasting pickle right now. However, if you are a buyer who was just biding your time, and waiting for the price of real estate to come back down to earth, you may be in luck. That being said, many buyers are still very wary of getting into a new home right now, fearing that prices will go down even further.


For those of you who want to get into the housing market, right now may the best time ever because, according to the National Association of Realtor, “the market is expected to turn around, over the next year,” which means, “existing home sales are expected to rise 50% in 2009.” That means hitting a mortgage lender and getting your own piece of real estate right now may end up bringing you high dividends by the end of 2009. Not only are home sales expected to rise but so are the rates for a 30-year fixed loan, which is still extremely low based on historical data, but much higher than we saw over the past eight years or so.


I understand that with all the bad news coming from mortgage lenders across the nation it’s hard to imagine making money off of real estate anymore, but remember that real estate is cyclical. That means it will bounce back and forth between a buyer’s market and a seller’s market, and if you do your research you can hit the housing market at the right time and get the biggest bang for your buck. Mortgage lenders are still in business, so if you think you can qualify with their tighter restrictions, I say jump in while you still can.




Increase the Value of Your Home Without Breaking the Bank

Real estate is still one of the best investments you can make. Whether you want to get a fixer upper you can turn around and sell for a profit, which believe it or not is still possible even in this housing market, or a home you can move yourself and your family into and plant roots. Either way you go, it’s always a good idea to spruce up your little corner of the world; it will help increase the value of your home and make you feel like you are living in a little piece of heaven. One more plus is the fact that mortgage lenders hire real estate appraisers to research the value of your home, and the better it looks, the more money you can get for it.



The good news is that you don’t even have to put in a lot of money to add value to your home and do well in this housing market. Even the smallest improvements can add a significant amount of cash to your pocketbook. In the world of real estate, the three key words you should know are location, location, location. To that end, before you even hit that mortgage lender up for your loan, decide the most advantage area to purchase a home in. That’s even more important in today’s housing market, because certain areas are starting to show signs of a rebound, so if you can get in now, you can make out big.


Another thing you want to keep in mind, storage is king when people are looking to buy. Even if you plan on staying in the home you purchase, adding more storage will make your life more manageable and add value to the real estate appraiser’s report when you get ready to sell. One great and affordable idea you can implement to add more storage is hanging wall units. Places like Target and Wal-Mart sell great looking wall units for prices even people on a tight budget can afford.


Another easy way to improve the value of your real estate is to bring those old

cabinets into the 21st century by repainting them and replacing those old rusty handles with bright shiny new ones. Again, these are easy things to do, they are cheap things to do and you would be amazed by how much more attention your house will get in a competitive housing market. While mortgage lenders won’t necessarily tell you about these things, real estate agents will. But doing these things before you even get to the stage of hiring a real estate agent or real estate appraiser will put you ahead of the game.


Look around at the home you are thinking about purchasing and search for any latches bolts and hinges that may need a bit of work. If you are a purchaser looking for your dream home, you can ask the seller to fix these before you move in. In today’s housing market you can get sellers to do a lot work for you that they may not have been willing to do when real estate was booming. If you are a seller, these little touches will give you the edge over others trying to sell right now.


Here’s another often overlooked fix that can make a world of difference, change the filters in your air-conditioner. This will help avoid musty smells during your walkthrough and avoid any hostility with your buyer when they find out their air-conditioner is spewing out dust. While you’re at it, try hanging a large mirror in the living room, as it will help create a feeling of space in the room. Another simple way to add space is by applying window boxes and hanging baskets around the house. I can’t say this enough, the housing market is very competitive for sellers right now, so all those extra added touches will add value, help the mortgage lender find quality buyers, add value to your real estate appraiser and make your home more attractive than the others trying to sell in your neighborhood.


If you can, try adding rooms to your house. It may sound like a huge undertaking, but if you already have a patio or attic, it’s simple and cheap to turn those into separate rooms. Why not turn that attic into a game room, or extra bedroom. Create a cozy breakfast nook in your patio. Again, these can be as small or big a renovation as your budget allows, and will bring you extra cash in the end.


It’s a difficult time in the housing industry right now, but as you can see, there are ways of improving your chances of getting out ahead. Real estate is now and will always be a good investment, especially to your personal future. This cycle will eventually turn back around, so if you apply what you’ve learned here now, you will be ahead of the game when the right time to sell comes around.


If you or anybody you know is thinking about buying a house, selling a house, refinancing a house or simply want to find out the current value of your house, please visit us at Mahler & Associates for all your appraisal needs.



Why the Future Now Looks Bright for Freddie Mac

Freddie Mac has a plan to stay in business and save taxpayers money. One of the nation’s top mortgage lenders, Freddie Mac, has been facing some serious financial problems of late, which has had severe implications for the housing market and real estate industry. But, on Friday, Freddie Mac announced plans to raise $5.5 billion by selling common and preferred stock, in order to bolster their economic outlook.


This announcement may help aleve fears the housing market has of another government bailout. Freddie Mac had previously said it would raise that money, but on Friday it finally registered its stock with the Securities & Exchange Commission, a move that allows the company to proceed. This is good news to home buyers who count on Freddie Mac to purchase their first piece of real estate as well as people who fall in the higher-rick category. The housing market has definitely taken a downward spiral, but mortgage lenders may be the ones hurt the most in this situation because they run their businesses off giving people loans.


Raising, say, $2.75 billion by selling common stock at current prices would entail issuing more than 300 million shares – reducing current investors’ stake in the company by a third. Freddie would presumably raise the rest of the money by selling preferred stock, but that won’t come cheap either. Even though it is nice to see Freddie Mac trying to get themselves out of the hole they are in, they may still end up needing help from the government. That being said, the housing market needs Freddie Mac to stay in business, so it will behoove us all to root for a good outcome for this mortgage lender.


Selling this stock could help this company put itself in better position to weather the housing market meltdown and resume making money when the economy and real estate industry rebounds. It’s been a tumultuous few weeks for Freddie Mac, and the companies’ shares lost more than half their value last week, amid fears that falling house prices will lead to big losses on the mortgages the companies own and on the mortgage-backed securities they insure.


Even though this new plan of mortgage lender Freddie Mac is a sign of better days ahead, there are some who believe Freddie Mac should be nationalized, wiping out shareholders and putting an explicit government guarantee behind the companies’ obligations. But Treasury Secretary Paulson has said he believes the company should continue to be shareholder-owned. One of the reasons for this, according to experts, is that they “see a parallel in the Chrysler bailout of the early 1980s, in which the government took warrants in the automaker in exchange for providing an emergency loan guarantee, and when Chrysler returned to health later in the decade, the government was able to cash in the warrants, allowing taxpayers to share in the fruits of the company’s recovery.”


Whether or not Freddie Mac’s new financial plan works remains to be seen, but it does show that the mortgage lender is at least trying. The housing market needs mortgage lenders to survive this crash; otherwise we could all see ourselves renting for the rest of our lives. Real estate is cyclical, so there is no doubt there will be a rebound. The only question now, is when and how big?



New Plan That May Help The Housing Market Rebound

Rest assured the housing market slump will turn around. It has to, not only for people who purchase real estate, but also for mortgage lenders whose livelihood and businesses depend upon it. Not only that, the nation’s economy needs a rebound in order to stabilize. Based on that, a group representing the buyers and sellers of mortgage backed securities unveiled a plan on Wednesday to recharge the declining housing market.


Just to give you a little background, here’s how mortgage lenders have handled real estate loans up till now; most of the nation’s mortgage loans are packaged together by their issuers – such as Countrywide, Wells Fargo and Wachovia and they in turn sell theses loans to investors as mortgage backed securities. That’s how mortgage lenders raise more money to make more loans. Now, when the housing market is booming, these practices help everybody, which includes homeowners who purchase real estate.


However, once the housing market began to crash, losses in these investments began to pile up. This caused individuals and institutions like pension funds, hedge funds, insurance companies and banks to stop buying these pools of residential mortgages from mortgage lenders. That left lenders cash-strapped, and made it harder for home buyers to get loans. So you can see how the trend began, and how it became a vicious cycle. The real estate market has always relayed upon all kinds of investments, but as you can see, once one begins to falter, the rest follows; it’s like a house of cards.


But now the American Securitization Forum hopes its plan, Project RESTART, will increase the supply of mortgage loans available to borrowers and help to lower the costs incurred by mortgage lenders in these trying time in the housing market. Now, once the mortgage lenders are in a better position in the real estate market, so too will follow home buyers and home sellers. The goal of Project Restart is to build up confidence in the people who invest in these securities.


This plan, if it works, couldn’t come at a better time for the housing market, as people in the real estate industry are starting to question the fiscal health of mortgage lenders Fannie Mae and Freddie Mac, especially when you consider the fact that Fannie Mae and Freddie Mac have provided the majority of mortgage funding over the past year or so. This plan aims to revive the segment of the secondary market that trades in mortgages that are not backed by the two mortgage giants.


Here’s what this plan will try and accomplish; it will try and clear up the details of these funds, for the people who are investing in them. This transparency will help the investors better understand the risks involved and potential benefits from individual pools and help them judge their pricing more accurately, which they hope will encourage them to continue buying these securities. Not only will this help investors make more money, it will help mortgage lenders stay afloat, which in turn will boost the housing market and real estate industry back up.


Initially the focus will be on residential mortgages of all types, jumbo, prime, Alt-A and subprime. So if the plan works, mortgage lenders would be able to give out loans to people looking to get into the housing market on both ends of the spectrum; upper-end and those in the higher-risk categories. Keep in mind, these people all want to make money, and the real estate industry has always been a good investment, even with all its ups and downs. That means the more people who can get into the housing market the better for them and their pocketbooks.


 I know it’s a scary time out there for people. There are sellers who are desperate to get out of their current real estate without taking a loss and there are buyers who want nothing more than to move their families into their own homes. Combine that with the real estate industry’s desperation to stay afloat and the government’s desire to keep this country out of a major recession, and you have a recipe for a rebound in the housing market. Keep your chins up, I have no doubt things will begin to level off and sooner rather than later.




Why The Rising Costs of Buying a Home Could Be a Good Thing

Here’s the good news; more and more people are calling mortgage lenders to check on home loans. Here’s the bad news; the price of getting into the housing market is higher because those in the real estate industry are tightening the requirements. Now I say that’s the bad news, but in actuality I believe it to be good news as well. However, if you think you can purchase a home with the low interest rates and almost zero down payment of yesterday, you are in for a rude awakening.


It used to be that nobody thought about purchasing real estate without putting at least 10 percent down. Well, with the housing market being what it was over the past eight years or so, nobody could afford to put 10 percent down. You see homes were unrealistically priced, so mortgage lenders had to come up with more creative financing to get home buyers those loans. Of course we see the folly of their ways now, especially with all those homes in your neighborhood going into foreclosure. So the fact that it is more difficult to get a home loan now might not be too bad. And don’t forget that there are still deals out there for first-time buyers that don’t require as much as other loans do.


Here’s what experts in the housing market like Rich Wordman, president of the Florida Association of Mortgage Brokers, are saying, “these days, home buyers are having to make down payments of approx 5%, in order to get a deal from a mortgage lender.” Ok, but like I said, before the previous housing boom, most people were paying 10%, so that’s still cheaper than it was before. The days of a no-down payment loan may be over, but that never should have taken place in the real estate market to begin with, and it is precisely why we are in the mess we are in now.


Now, if you are looking to get into a more expensive housing market, mortgage lenders may require as much as 20% down, but if you can’t afford that, you probably shouldn’t be buying a more expensive home. However, if you are a first-time buyer of real estate, Freddie Mac and Fannie Mae specialize in offering deals that can help you get into that home. Granted, we are seeing a lot of rhetoric about whether or not these two mortgage lenders are healthy enough to survive the current conditions in the housing market, but it is highly unlikely they won’t, since they are government run companies. That means the government would be impacted financially if they fail, and we all know how much the government likes their money.


One problem I do see as being valid is the fact that rent can be extremely expensive, which means it’s that much more difficult to try and save enough money to put 10% on a piece of real estate. But again, that’s where you need to decide whether or not it is more economical to get into the housing market or continue renting until the real estate industry re-stabilizes.


Another issue people are complaining about is the fact that interest rates are higher. Ok, let’s take a look at that; when interest rates were around the ridiculously low 2%, home prices were up to equally ridiculous amounts on the opposite end of the spectrum. I mean you couldn’t find a condo in Los Angeles for under $500,000. No wonder people needed to get into those volatile no-down mortgage loans, and no wonder mortgage lenders had to offer them. With interest rates going up, homes prices are going down to a more reasonable level. Besides, if you look at the history of the housing market, interest rates are still relatively low.


Here’s the bottom line; the housing market is readjusting itself so there will be some volatility. That being said, the way things were in the real estate industry didn’t do anybody any good when you look at how many people are losing their homes now and how many mortgage lenders are in trouble. The housing market always goes in cycles, and we are now looking at what is called a buyer’s market. So, if you are looking for someplace to lay your hate for a while, buying a new home right now could be a good thing. If, however, you are looking to make a quick buck, sorry those days are over…at least for now.




How to Spot a Rise in the Housing Market

Ok, so the news doesn’t look so good for the housing market right now what with IndyMac being seized by the government and mortgage lenders Freddie Mac and Fannie Mae’s stock plummeting. But take heart, because real estate always seems to rebound, and in fact, there are areas of the nation that are beginning to see a brighter future.


First you have to keep in mind that just because the housing market in one area is bad, that doesn’t mean it is bad all over. That’s because real estate is a local game. In fact median prices for existing single-family homes in a third of the country’s metro areas are actually higher than they were a year ago, according to the National Association of Realtors. Of course you’ll have to do your research, especially when looking for reputable mortgage lenders and real estate appraisers. Be very careful though, because one of the shady practices of some mortgage lenders is coercing real estate appraisers to turn in a report that shows a higher value for a home than the market in those areas really reflects.


You also want to keep in mind that even when the housing market was beginning its bubble, different areas of the nation were booming sooner than others. For example; real estate in Las Vegas and San Diego were two of the first markets to shoot up. That being said, different cities in the country will start rebounding faster than others as well. The point I’m trying to make is this, don’t lose hope just because the housing market in your area still stinks. Again, it may be even more important than ever to find an honest mortgage lender even before you begin looking for your home. Try asking around; word of mouth is the best referral source you’ll find.


With prices of homes starting to fall, you may be thinking this is a good time to get into the housing market. But before you do, ask yourself a few key questions, in order to gage whether or not real estate is rebounding in your area.


First of all, is there a reduction in the supply of homes combined with a spike in sales in your area? If so, this is a good sign that your location is on the way back up the real estate ladder. Try and research the amount of mortgage loan applications mortgage lenders in your area are getting. Again, if it is a lot, or if the number is rising, that’s a good sign. You may want to enlist the aid of an experienced real estate agent for that one, because often times, it can be difficult information to get unless you work in the housing market industry.


Even though falling home prices are a good thing for buyers, knowing when the fall begins to slow down is even better. For information on the sale prices of homes in the housing market in your area you can find quarterly price data for about 150 major metro areas at the Web site of the National Association of Realtors. For monthly figures, ask your agent or local real estate association. Some agents will even provide stats for homes in particular price ranges and zip codes. Another good option is to hire a real estate appraiser. They do research on the sale of real estate in your area, and can tell you what the going rate is. Keep in mind that you’ll want to track these numbers for at least three months in order to feel confident that the housing market is really shifting.


Finally ask yourself this question; is the real estate in the housing market you’re looking in really more affordable? Unless a significant percentage of households in a market can afford to buy homes there, sales won’t rise. It’s as simple as that. So check your region’s affordability level. But don’t price yourself out of the housing market by waiting too long, because experts say that by the time foreclosures peak and start falling, the market will have already bottomed out and turned around. In other words, buyers will have missed the sweet spot.


If you are looking into buying a house right now, do your research, hire a thorough and honest real estate appraiser and real estate agent and ensure you are dealing with a reputable mortgage lender. If you are careful about your purchase and you time it right, you may just get yourself into your dream home.


If you are looking to buy a home, sell a home, refinance a home or find out what your current home is worth, please contact us at Mahler & Associates for all your appraisal needs.



The Fed’s New Housing Bill Released…Too Late for IndyMac Bank

It has been reported that approximately 200 people were waiting in line at Pasadena based IndyMac bank this morning to withdraw any and all money they could. For all the people who had more than the insured $100,000 at IndyMac, the FDIC has said they will cover up to half of the rest. That comes to a lot of money, so we’ll have to wait and see if they follow through with that promise. Meanwhile, The Federal Reserve unanimously approved new mortgage lending rules Monday in a crackdown on shady practices – particularly those involving subprime loans made to borrowers with weak credit.


This is the bill I wrote about last week. Both consumers and mortgage lenders were displeased with the original bill, which has since been tweaked in order to make as many people happy as possible. To that end, the agency made several substantial revisions to the proposed regulations it unveiled in December. Many of the changes acknowledged consumer advocates’ concerns that the rules still contained too many loopholes that would allow shady mortgage lending practices to continue. But the Fed also made some concessions to industry executives, who feared increasing oversight would lead to less lending.


The new rules will apply to all mortgage lenders, not just those supervised and examined by the Fed. The new rules will go into effect Oct. 1, 2009, but that doesn’t mean the investigation is over. The people who brought us this bill have announced that they will continue to scrutinize all mortgage lending companies, in order to ensure they are following the new rules and aren’t getting around them and further complicating the mess we have in the housing market.


So here are the rules as they stand right now. The new rules governing “higher-priced,” or subprime, loans will:

Prohibit creditors from extending credit without regard to a consumer’s ability to repay the loan from income and assets other than the home’s value. The mortgage lender will comply by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. Mortgage lenders will also have to verify income and assets that can determine whether or not the borrower is fiscally able to pay their mortgage.


Furthermore, the new bill will ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. Mortgage lenders and creditors will also have to establish escrow account for property taxes and homeowner’s insurance. This rule will be phased in during 2010.


One of the changes The Fed made was to the definition of higher-priced loans with regards to mortgages rates that are at least 1.5 percentage points above the average mortgage rate, which is published by Freddie Mac; who by the way is also under the government’s radar for shady mortgage lending practices. No here’s a big one I have personally been affected by; Creditors and mortgage brokers cannot coerce a real estate appraiser to misstate a home’s value. I have lost thousands of dollars over the past five years do to this practice. For those real estate appraisers unwilling to fudge the numbers, this comes as a happy occasion.


Mortgage lending companies are now to be upfront and completely honest about late fees and hidden fees. It seems they were glossing over this information, which is one of the reasons so many people in the housing market find themselves in foreclosure now. They were led to believe their mortgage would be one fee, only to find out it was more do to those hidden fees. In order to further ensure people getting into the housing market know what they are in for, The Feds have included a rule that in any advertisement a company must include additional information about rates, monthly payments and loan features. The rule also bans seven deceptive practices, such as saying a rate is fixed when it can change. Sadly, that kind of stuff should have already been the standard operating practice. I find it disgusting that the government has to put these rules into writing and make them law.


Most advocates for the housing market and real estate consumer are generally pleased with the bill, and feel their months and months of keeping up with the progress of it has paid off. More than 4,500 comments were filed since the agency announced its plan in late December, and after reviewing the final rules, advocates said they felt the changes did provide additional protections for the consumers. In particular, it’s important that the Fed eliminated the requirement that borrowers prove lenders engaged in a “pattern or practice” of originating unaffordable loans since that’s very hard to do, said Brenda Muniz, legislative director of Acorn, a housing advocacy group.


As for whether this new bill will help the slumping housing market and bring real estate back to stability, that remains to be seen. There are also people who feel this bill is too little too late. But what about you; do you think this new bill will curtail shady mortgage lending practices. Leave us a comment and tell us how you feel.