Friday, October 31, 2014

Homeowners Win with Major Drop in Distressed Sales

The housing market continues to show signs of improvement, but one number recorded in the National Association of Realtors July existing home sales data really exemplifies that progress —a drop in the number of homes sold in distress. 

According to NAR, only 9 percent of homes last month were sold in distress, which encompasses foreclosures and short sales. That number is the lowest NAR has recorded since the organization began tracking distressed sales in October 2008. 


For comparison, distressed sales accounted for 15 percent of all sales just one year ago. NAR Chief Economist Lawrence Yun said the drop in distressed home sales resulted from rising home sales, which help owners recover equity, and steady job creation, which adds financial stability for homeowners. 

Thursday, October 30, 2014

Existing-Home Sales Rebound

WASHINGTON (October 21, 2014) – After a modest decline last month, existing-home sales bounced back in September to their highest annual pace of the year, according to the National Association of Realtors®.  All major regions except for the Midwest experienced gains in September.
Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.4 percent to a seasonally adjusted annual rate of 5.17 million in September from 5.05 million in August. Sales are now at their highest pace of 2014, but still remain 1.7 percent below the 5.26 million-unit level from last September.
Lawrence Yun, NAR chief economist, says the improved demand for buying seen since the spring has carried into the fall. “Low interest rates and price gains holding steady led to September’s healthy increase, even with investor activity remaining on par with last month’s marked decline,” he said. “Traditional buyers are entering a less competitive market with fewer investors searching for available homes, but may also face a slight decline in choices due to the fact that inventory generally falls heading into the winter.”
The median existing-home price2 for all housing types in September was $209,700, which is 5.6 percent above September 2013. This marks the 31st consecutive month of year-over-year price gains.
Total housing inventory3 at the end of September fell 1.3 percent to 2.30 million existing homes available for sale, which represents a 5.3-month supply at the current sales pace. Despite fewer homes for sale in September, unsold inventory is still 6.0 percent higher than a year ago, when there were 2.17 million existing homes available for sale.
All-cash sales were 24 percent of transactions in September, up slightly from August (23 percent) but down from 33 percent in September of last year. Individual investors, who account for many cash sales, purchased 14 percent of homes in September, up from 12 percent last month but below September 2013 (19 percent). Sixty-three percent of investors paid cash in September.  
According to Freddie Mac, after falling for four consecutive months, the average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.16 percent in September from 4.12 percent in August. Despite the slight increase, interest rates are 33 basis points less than a year ago (4.49 percent). 
“Economic instability overseas is leading to volatility in the stock market and is causing investors to seek safer bets, which will likely keep interest rates in upcoming weeks hovering near or below where they are now,” said Yun. “This is welcoming news for consumers looking to buy, although they could temporarily become more cautious by less certain economic conditions.”  
The percent share of first-time buyers continues to underperform historically, remaining at 29 percent for the third consecutive month. First-time buyers have represented less than 30 percent of all buyers in 17 of the past 18 months.
Distressed homes4 – foreclosures and short sales – increased slightly in September to 10 percent from 8 percent in August, but are down from 14 percent a year ago. Seven percent of September sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 14 percent below market value in September (same as in August), while short sales were discounted 14 percent (10 percent in August).          
According to NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, fewer distressed sales is good news for appraisers, who have faced undue pressure since the downturn. “An appraisal is an important part of the home buying and selling process,” he said. “With foreclosures and short sales falling closer to average levels, appraisers will have fewer distressed sales in their list of comparables when determining home valuations.”
Properties typically stayed on the market in September longer (56 days) than last month (53 days) and a year ago (50 days). Short sales were on the market for a median of 116 days in September, while foreclosures sold in 59 days and non-distressed homes typically took 55 days. Thirty-five percent of homes sold in September were on the market for less than a month.
Single-family home sales rose 2.0 percent to a seasonally adjusted annual rate of 4.56 million in September from 4.47 million in August, but remain 1.9 percent below the 4.65 million pace a year ago. The median existing single-family home price was $210,300 in September, up 5.9 percent from September 2013.
Existing condominium and co-op sales increased 5.2 percent to a seasonally adjusted annual rate of 610,000 units in September from 580,000 in August, and are unchanged from the 610,000 unit pace a year ago. The median existing condo price was $205,200 in September, which is 3.2 percent higher than a year ago.
Regionally, September existing-home sales in the Northeast climbed 1.5 percent to an annual rate of 680,000, but remain 1.4 percent below a year ago. The median price in the Northeast was $249,800, which is 4.8 percent higher than a year ago.
In the Midwest, existing-home sales declined 5.6 percent to an annual level of 1.17 million in September, and remain 4.9 percent below September 2013. The median price in the Midwest was $165,100, up 4.9 percent from a year ago.
Existing-home sales in the South increased 5.0 percent to an annual rate of 2.12 million in September, and are now 1.4 percent above September 2013. The median price in the South was $180,900, up 5.1 percent from a year ago.
Existing-home sales in the West jumped 7.1 percent to an annual rate of 1.20 million in September, but remain 4.0 percent below a year ago. The median price in the West was $294,200, which is 4.0 percent above September 2013.
# # #
NOTE:  For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.
1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
3Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
4Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’sRealtors® Confidence Index, posted at Realtor.org.

reprinted from realtor.org

Wednesday, October 22, 2014

Understanding Credit

Understanding Credit
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Credit is one of the most important components in the mortgage approval process.


Lenders look at a borrower’s credit score, number of open accounts, payment history, type of credit borrowed and a series of other factors when determining what level of risk to assess to each lending scenario.
Down payment requirements, loan programs, flexibility on income and even interest rates can be impacted by a slight bump in a credit score.
According To Wikipedia:
credit score in the United States is a number representing the creditworthiness of a person or the likelihood that person will pay his or her debts.
A credit score is primarily based on a statistical analysis of a person’s credit report information, typically from the three major American credit bureausEquifaxExperian, and TransUnion.
The Fair Isaac Corporation, known as FICO, created the first credit scoring system in 1958, for American Investments, and the first credit scoring system for a bank credit card in 1970, for American Bank and Trust.
The three credit reporting agencies in the United States of America, Equifax, Experian, and TransUnion, collect data about consumers used to compile credit reports. The credit agencies use FICO software to generate FICO scores, which are sold to lenders. Each individual actually has three credit scores at any given time for any given scoring model because the three credit agencies have their own databases, gather reports from different creditors, and receive information from creditors at different times.
In the United States, a resident is permitted by law to view their credit report once a year at no charge by visiting the websiteAnnualCreditReport.com. The individual’s “credit score” information is available for an additional fee from each of the three credit reporting agencies. In addition, the Fair Isaac Corporation sells FICO scores directly to consumers using data from Equifax and TransUnion.
A FICO score is between 300 and 850, exhibiting a left-skewed distribution with 60% of scores near the right between 650 and 799.
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Once credit has been established and maintained, credit scores are based on five factors to varying degrees: payment history (35%), total amounts owed (30%), length of time (15%), type of credit (10%) and new credit (10%).

The largest impact on credit scores is payment history and amount owed, which is why it is important to pay bills on time.
Debt should be kept to a minimum and funds should be moved around as little as possible. It may be beneficial to leave all accounts open, even if they have a $0 balance.
Different types of credit (ie. mix of credit cards, installment loans and fixed payments) can also be beneficial to a credit score.
However, too many installment loans can negatively affect credit.
Although time is a necessary factor for improving credit scores, this can be controlled by keeping the accounts that are opened during the same time period to a minimum.
By following these guidelines over an extended period of time, credit scores can be maintained and improved in order to improve the borrower’s loan potential and interest rate.
Key Factors That Impact Your Score:
1. Payment History (35%)
It is essential to pay your credit bills on time. Every 30 days late, collection, judgment, or Bankruptcy significantly drops your score.
2. Amount You Owe Compared to Balances (30%)
Your available credit compared to the amount owed. It’s a good rule-of-thumb to be at 40% or less of the available balances
3. Length of Credit History (15%)
Easy rule-of-thumb: the longer your accounts are open, the more positive impact it will have on your overall credit score.  In fact, if you happen to have a card that is over 10 years old with even a little activity, it would probably be a bad idea to close that card.
4. Mix of Credit (10%)
Generally speaking, if you have loans, such as a car loan, as well as open credit cards, it helps prove to creditors that you have experience borrowing money.
5. New Credit Applications (10%)
There is a model that compensates for people shopping rates on home and car loans, but it can hurt your credit score to have multiple reports pulled in a short amount of time.
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Factors That DO NOT Impact Credit:
  • Age
  • Race
  • Sex
  • Employment History
  • Income
  • Marital Status
  • If you’ve been turned down for credit
  • Length of time at current address
  • Whether you own a home or rent
  • Information not contained in your credit report
Establishing Credit:
Several factors can be used to establish credit initially, including bank accounts, employment history, residence history and utility bills.
Although they are not reported directly to credit bureaus, bank account history is important to lenders for first time loans and should be kept in good standing.
While they are also not reported to credit bureaus, utility bills (such as electric, telephone, cable and water) can also show a lender the risk associated with a new borrower.
Credit may be initially established through a bank, in which a credit card is linked to a specific amount of money deposited in the bank.  If the credit card is not kept in good standing, the bank can then take the secured funds for payment.
Initial credit may also be established with a department store credit card (for example), but borrowers should beware of the high interest rates associated with these cards and pay off the balances in full.
_________________________________


David Sharp
123 Mortgage Team
7512 Big Bend Blvd St. Louis, Mo 63119
NMLS # 280482
(314)260-4360 Office

(314)440-3620 Cellphone

Saturday, October 11, 2014

Foreclosure Quiz - how much do you know?

take this quiz from Realtor.org  -   QUIZ: Foreclosure
Before you jump into the hot foreclosure market, test your knowledge to make sure you’re not getting in over your head. Our interactive quiz clears up popular misconceptions and helps you gain a more complete understanding of foreclosure — including how to help home owners avoid it.

1.As a general rule, foreclosed homes sell for less than their market value.
True
False


2.In most states, if you bid on a foreclosed property at an auction, you also may be bidding on tax liens and other debt accrued by the prior home owners.
True
False


3.The housing boom masked the high number of home owners who’ve struggled with paying their subprime loans — and these home owners may now be at high risk of foreclosure.
True
False


4.Home owners who always pay their mortgage on time don’t need to worry about foreclosed homes in their neighborhood.
True
False


5.Home owners can sidestep foreclosure by transferring the title of their home to a foreclosure rescue company for a year or two.
True
False


6 .Any buyer can purchase a HUD home (a home that’s in possession of the U.S. Department of Housing and Urban Development), as long as he or she has the money or can qualify for the necessary amount of mortgage financing.
True
False


7 .Reading the public notices at your local county courthouse — including bankruptcy claims and death certificates — is not an effective method of locating foreclosed properties.
True
False


8 .Once home owners default on three mortgage payments, the home automatically goes into foreclosure.
True
False


9 .In many states, owners of foreclosed homes can reclaim their property — even after someone else has already bought it — by paying off the loan along with any interest, taxes, and penalties.
True
False


10.Lenders stand to benefit when home owners default on their mortgage.
True
False


11.Once a bank takes possession of a foreclosed home, the previous owner is free of all financial obligations.
True
False


answers: 1. false 2.true 3.true 4.false 5. false 6.true 7.false 8. false 9 true 10 false 11 false

http://www.realtor.org/RMOQuiz2.nsf/foreclosurequiz?OpenForm