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Archive for the 'Real Estate Finance' Category

FHA LOAN? CONVENTIONAL LOAN?

August 2nd, 2010 categories: Buying, Market Trends, Real Estate Finance, Selling

Jack Guttentag recently published an article comparing the two types of loans. His analysis is very detailed and bears out the generally accepted wisdom that the conventional loan is the more desirable. This is the first time I have ever seen so much information about the different type of loans and their amounts. He discuses the differences between, “Conforming standard loans,” “Conforming jumbo loans,” “Nonconforming jumbo loans,” “FHA Standard loans” and “FHA jumbo loans.” The information is exceptionally good and should be a must-read for anyone in the buying and/or borrowing mode right now. This is an article that will require careful attention to the almost mind-numbing details–and it will reward you with a much better understanding of today’s loan climate. Click here for the whole article.

Real estate questions? Just call me at 312-607-1306 or e-mail me.

WHAT’S HAPPENING–SALES AND RATES BOTH DOWN?

July 1st, 2010 categories: Buying, Lifestyle, Real Estate Finance, Selling

A recent Wall Street Journal article summarized what is going on in the real estate market today. Interest rates are at 4.58%–the lowest since Freddie Mac began keeping records in 1971. And even with plentiful inventory and historically low interest rates, home sales are down. Everyone expected sales to fall after the April 30 tax credit expired–just not as much as they did.

The point is made that because of today’s tougher lending requirements, many would-be borrowers cannot get a loan. Also noted is the fact that it takes from one to two months to close a transaction once a property is under contract. It will be July or August before subsequent declines will show up. If mortgage rates had gone up instead of down, it could have been much, much worse. And this is bad enough for me!

The closing paragraph says it all: “No job=No house.” Employment will stop the pain in the housing market. To read the whole article, just click here.

It would be my great pleasure to answer any questions you may have about Chicago real estate. Just call me, 312-607-1306, or e-mail me.

BUY A FORECLOSURE OR AN REO? WHY NOT!

June 29th, 2010 categories: Buying, Investment, Market Trends, Real Estate Finance

The Chicago Tribune had a section recently that really is a primer of the basic things a buyer needs to know if they are considering buying a distressed property. Basically there are five articles in this section:

Buying a foreclosure. Don’t let a complicated process keep you from considering a foreclosure purchase.
Home inspections can help determine the scope of work that needs to be done. It is important that you hire a licensed inspector–don’t use a contractor friend. If possible, find an inspector who has done a number of foreclosure inspections.
Fix it up or forget it. How to know when to tackle a rehab project yourself and when to get professional help.
Unique situations. Foreclosures offer a wide range of surprises–from financial to structural. This article describes some additional things to think about when buying a distressed property.
The financing ABCs of REOs. This article stresses the importance of having your financing in order when you make an offer.

If you are really serious about pursuing the idea of purchasing a distressed property–read all five of the short articles–or click on the ones that interest you and read them.

Questions? Call me, 312-607-1306 or e-mail me.

2010 A BETTER YEAR FOR SELLING THAN 2011?

June 17th, 2010 categories: Buying, Market Trends, Real Estate Finance, Selling

My favorite Honolulu Realtor, Keahi Pelayo, recently posted a blog about the reasons why 2010 is a better year to sell than 2011. Keahi points out that three key tax rates may go up–personal income tax, federal dividend tax rate and for long-time home owners, the capital gains tax is the most important. It will increase from 15 per cent to 20 per cent. Why is this happening? The tax cuts put in place by President George W. Bush will expire on or about January 1, 2011–and unless Congress and the President renew the cuts there will be hefty rate increases. Our Chicago market is comparable to the Honolulu market–strong relative to many other places in the country. If you sell next year, you may have to pay that hefty increase in the capital gain tax. Since prices are not going up fast, it could take a number of years for appreciation to make up the difference between your net proceeds in 2010 versus 2011. Keahi also references an excellent article by Arthur Laffer–think about reading both Keahi’s post and the article. A great bonus if you read Keahi’s post are the wonderful pictures of Hawaii at the top of his page.

In the meantime, if you wold like to know what your home is worth in today’s market–just call me, 312-981-2360, or e-mail me–I would love to help you with your decision.

Three other posts you might find helpful are:

Home Affordability–A Balancing Act

Real Estate Agent Secrets

Bottomed Out? Maybe? Irish Cottages?

Spoken by Ruth Karel | Discussion: No Comments »

BE PREPARED, BE PRE-APPROVED

June 14th, 2010 categories: Buying, Market Trends, Real Estate Finance, Selling

iStock_000004844404XSmall Why the picture of a 3 cent stamp (now who can remember that?) with boy scouts on it? My title gives the reason–pre-approval is preparedness. My friend, Israel Barden, writes a real estate blog in Big Bear Lake, California. One of his latest gives some of the best reasons to be pre-approved for the purchase of a home that I have run across. His title is great and so I used it–just couldn’t think of a better one. Here, in short, are the points Izzy makes:

Credibility with a seller. You, as a buyer, are instantly much more credible with a pre-approval letter.
Speed–You can move quickly when that irresistible buy comes on the market.
Knowledge–you know exactly how much home you can afford.
Pre-approval is a requirement for purchasing bank-owned properties–your offer won’t even be looked at without a pre-approval.

The point is–a bit of time taken before you make an offer will smooth the whole process and make it ever so much easier than if you just rush into purchase without the pre-approval. It would be worth your while to read all of Izzy’s article–just click here.

If you need a good mortgage person to pre-approve you and then a Realtor to help you identify a new home, just call me, 312-607-1306. E-mail works fine too.

Some other posts you might enjoy:

Kid Gloves Not Mittens for Today’s Buyer

FHA–Can It Help Me?

Condo Documents Needed For A Purchase

Spoken by Ruth Karel | Discussion: No Comments »

OH, CANADA! HOW GREAT THY MORTGAGES?

June 11th, 2010 categories: Buying, Market Trends, Real Estate Finance, Selling

A recent Wall Street Journal article makes a great comparison between our mortgage market and the Canadian mortgage market. The source of the article is a speech by Virginie Traclet, a Bank of Canada researcher. She described the Canadian mortgage market for her American colleagues at a conference hosted by the Federal Reserve Bank of Cleveland. A very telling statement is that mortgage interest isn’t deductible so the author feels the Canadian government isn’t bribing people to take on more debt.

Canadian lenders are very conservative and closely regulated–their sub prime loans never accounted for more than 5 percent of the market. So what is the Canadian record for borrowers more than three months behind in their loan payments.? In March it was .44 per cent. In the United States it was 9.5 per cent for that month.

What the Canadian borrower does not have is our 30 year fixed-rate mortgages with the right to prepay at any time. Most Canadian mortgages have five-year terms–at the end of five years the mortgage is either renewed or refinanced and the interest rates could have increased. In today’s economic climate, that could be a risky proposition for a homeowner. To read the entire article, just click here.

MORTGAGE APPROVAL NEWS

May 26th, 2010 categories: Buying, Market Trends, Real Estate Finance, Selling

And it isn’t a pretty sight! I chatted with a real estate attorney this morning and he confirmed what I have been experiencing and hearing–getting a loan funded and closed today is a challenging task. My favorite mortgage blogger, Larry Steinway, recently published an article, “Your Mortgage Isn’t Final Until It’s Funded,” that outlines some of the pitfalls getting a loan approved today.

Larry also references a fabulous MSN Money article, “10 Things That Can Kill A Home Loan,” that really goes into chapter and verse of what can happen to a mortgage application. Most articles about loan approval will tell you the obvious–no new auto loans, no new credit cards. In other words, jut plain no new debt. There are a lot of other factors that go into getting a loan approved and Larry’s article talks about a few. Is the home “unfit for human habitation?” Did you know that Private Mortgage Insurance is based on ZIP code eligibility? Some ZIP codes are tougher on Private Mortgage Insurance than others–you could be eligible for it in one ZIP code and not in the next one over. Larry’s best suggestion is to get together with your Realtor and your loan officer and make a plan–know the rules first. If you are currently involved in the loan application process or plan to be in the near future, read both articles. And they are good for general information too! They are the best I have read in a long time.

Do you need a Realtor to help you with finding a new home and helping you with a loan approval plan? Just call me, 312-607-1306 is my cell phone, and my direct line is 312-981-2360. E-mail works too!

Here are three other articles you might find helpful:

But I Paid. . .And I Need. . .

Presto Changeo–Debt Turns Into Taxes

Fannie Mae Rule Changes

Spoken by Ruth Karel | Discussion: No Comments »

BUT I PAID. . . AND I NEED. . .

May 18th, 2010 categories: Buying, Investment, Market Trends, Real Estate Finance, Selling

My friend, Tyler Wood, a Realtor in Big Bear Lake, California, has a video that says it all. Why it doesn’t matter to a buyer what you paid or what you need or want. Even if it seems a seller is making a great deal of money on a property because they have owned it for a long time, why that seller is entitled to fair market value. Take a look at Tyler’s video–it says it all very well.

I guess my favorite example of what Tyler talks about is an estate sale. If you inherit a home from your parents, you paid nothing for it. And you are still entitled to fair market value–right?

Other articles you might find interesting are:

Moving Miseries Magic

Absorption Rate Revisited

Fire! A Few Suggestions

Spoken by Ruth Karel | Discussion: 2 Comments »

PRESTO CHANGEO–DEBT TURNS INTO TAXES!

May 14th, 2010 categories: Buying, Market Trends, Real Estate Finance, Selling

Who would have thought that walking away from an unaffordable mortgage could turn into big-time taxes? This certainly sounds like grade A smoke and mirrors–and it isn’t. A recent Wall Street Journal article gives chapter and verse about how this happens. The article also says that any consumer debt that a bank cancels, including credit-card balances or a car lease, can result in a tax liability on the amount of debt canceled. The first mortgage modification program was focused on primary mortgages–mortgages tied to primary residences. The debt had to be acquired before January 1, 2009, and had to be used only for buying, building or remodeling or repairing a primary residence.

The new expanded modification programs include short sales, deed-in-lieu, and second mortgages. Tax bills so high that people can’t pay them do happen. The IRS will put those people on an installment plan. Insolvency can lead to an adjustment and it can also lead to still owing some taxes. Anyone who is even remotely thinking of even considering walking away from their mortgage should read this article. It sounds so easy–just stop paying and leave–doesn’t it. Unfortunately the ramifications can be something else. Click here for the entire article.

FANNIE MAE RULE CHANGES

May 5th, 2010 categories: Buying, Market Trends, Real Estate Finance, Selling

Larry Steinway has written an article that tells us all about the changes Fannie Mae is making to ARMs and interest only loans. The official announcement was made on April 30, 2010. Changes will be made for the next 12 weeks. The first change was to ARM standards–they are much more stringent. The standard seven year balloon mortgage has been eliminated. Strict new outlines for interest only mortgages will go into effect on June 19,2010. Read the article by clicking here. There are two links in the article that might be helpful to you also. Freddie Mac will stop offering interest only loans in September of this year. The article makes a very valid point that it will probably get worse before it gets better because mortgage default rates are high.

Let me know if you have questions about Chicago real estate. My direct dial is 312-981-2360 and my cell phone is 312-607-1306. E-mail is another way to contact me.

Some other posts you might like to read:

Home Ownership Still Rocks

Loan Modification 101

Definitions–Just One More

Spoken by Ruth Karel | Discussion: 1 Comment »

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