Is your CPA Going To Sabotage Your Homebuying Plans?

Do not let your CPA sabotage your plans to purchase your home in 2012. Call me before you submit your tax returns to the IRS to discuss which deductions are going to hurt you qualifying for a home loan. Whether you are a W-2 wage earner or self-employed this phone call is important!

Ferderal Reserve Paves Way For Lower Rates

Wednesday’s Federal Reserve statement made mortgage rates drop right back to the record lows from several weeks ago. Since we hit that low, traders have been looking for some sort of clear direction on where the market would move next. The lack of rate positive news had made rates steadily creep higher over the last 3 weeks. Yesterday the Fed released a statement confirming they would continue to buy bonds and keep rates low until 2014. This statement coupled with low inflation reports are starting to make Quantatative Easing #3  ( QE3 ) rumors perculate through the bond market.

The market reacted positively with mortgage rates moving all the way back down to previous records. Strange as it may seem some investors were caught off guard with the big drop in rates, as the Fed’s actions are actually inflationary. Gold prices closed up over $35 dollars an ounce yesterday confirming that some investors believe inflation will be an issue. The reason the move to lower rates  is surprising is that  inflation is the mortal enemy of low rates and usually short-term moves by the fed like the one mentioned above would be trumped by longer term inflation fears.  

What does this mean to you? Don’t fight it!  Wall Street typically trades on rumors and sells on news. So the rumor of the Fed continuing to make money easily available is good for rates today but as soon as it is confirmed look for rates to spike.

Take advantage of today’s historically great affordability and low rates. If you have been thinking of buying a home, your new mortgage payment could be lower than the going rents in your market. If you already own a home with a good mortgage or have paid on your current mortgage for a long time, please let me help you look into a shorter term mortgage. It could save you thousands of dollars over the life of you loan.

Please let me be of assistance in helping you answer questions about financing your home.

Pending Home Sales Rise in November

Washington, DC, December 29, 2011

The Pending Home Sales Index (PHSI) increase 7.3 percent on a seasonally adjusted basis to reach its’ highest level in 19 months, according to the National Association of Realtors® (NAR). The PHSI is released during the first week of each month and is designed to be a leading indicator of housing activity.

The index measures housing contract activity and is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes.

The PHSI for November stands at 100.1 up from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.

The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflect contracts but not closings.

Lawrence Yun, NAR chief economist, said there were a number of reasons the report is positive.  “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” stated Yun. “November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.

The PHSI in the Northeast rose 8.1 percent to 77.1 in November but is 0.3 percent below November 2010. In the Midwest the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Reasons Not To Buy A Home

You can always find salespeople to tell you why you need to purchase something. Do you know that there are good reasons not to purchase real estate at the current time? Even if you have the financial resources and the desire to own your own home, there are a few good reasons to put off the purchase of a home. 

The main thing you want to avoid when buying a home is being put in a position where you will have to sell it too soon. If you have to sell a home before it has appreciated enough to cover the costs and commissions of selling, you could find yourself in a financial bind. Real Estate commissions traditionally run around five to six percent of a home’s sales price. Add to that the seller’s closing costs which generally come to about one and a half percent of the homes selling price and you can see how this can easily exceed the first year’s appreciation. If you made a minimal down payment, you could actually have to come up with cash out-of-pocket to sell your home.

Another very good to reason to delay buying a home is if you have just moved to an unfamiliar area or region of the country. It makes sense to rent for a number of months before deciding on exactly where you want to live. Often when people buy a home immediately they find that they might have made a better decision if they had waited awhile.

Common sense tells you that if your job is in jeopardy it’s not a good time to purchase but if you are right out of college and are expecting to be on the “fast track” your next promotion could move you out of the area. It could also mean a pretty big income bump which would allow you to move up into a nicer area or bigger home. A company expansion or impending restructuring could also be a hint to play it safe. In these cases it may also be a good idea to postpone purchasing for a few months when you have a more accurate picture of what your future holds.

Call me to discuss your specific circumstances and I will help you structure a sound financial plan to finance the purchase of your home now or later.

New Law To Help Los Angeles and Orange County Real Estate?

On Friday morning November 18th, President Barack Obama signed a bill that among other things will specifically aid real estate sales in high cost areas of Los Angeles and Orange Counties. In fact this is quite a surprising move by the administration and congress seeing all the rhetoric coming from Washington about the federal government getting out of the mortgage business.

The last two years  have seen the mortgage industry get very conservative as a whole. There have been a barrage of “take-a-ways” from Fannie Mae (FNMA), Freddie Mac (FHLMC) and the Federal Housing Administration (FHA), the institutions that are guaranteed by the US Government and purchase the majority of all mortgages today. These changes have made getting a home mortgage more difficult. One such recent change that just took effect on October 1, 2011 was the decrease in the temporary loan limits from $729,750 to $625,500. The law that went into effect today, returned the maximum loan limit for FHA to $729,750 for single family residences and condos until the end of 2013. No changes were made to the maximum loan limits of FNMA or FHLMC.

After the drop in the maximum loan limits sales of properties in Orange and Los Angeles counties with loans between $625,500 from $729,750 fell sharply, to 102 last month, according to San Diego real estate firm DataQuick. That was a 71% decline from 350 in September and down 71.5% from 358 sales in October 2010

How successful this move will be in stabilizing the real estate market will have to be seen. FHA is predominately used by first time homebuyers because it is less restrictive in income qualification and credit requirements, only requires a minimal 3.5% down payment (all of which can be a gift) and allows for non occupant borrowers such as parents trying to help their children qualify for a home. One of the few draw backs of FHA financing is that all FHA loans regardless of down payment require mortgage insurance. Besides how many first time homebuyers purchase a home in the $675,000 range?

 These institions are backed by guarantees made by the US government. As financial losses from the real estate implosion have mounted and regulations from the financial reform acts have become constrictive  other sources for mortgage money has become very scarce.

 . . Currently the Federal Government guarantees loans purchased by FNMA, FHLMC and FHA and over the last 3 years other sources for mortgage money has become very scares.

This is something that will help buyers using using FHA ) financing. F

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