Top Reasons to Own a Home

There's good reason that over half of all Americans are homeowners. Social and financial benefits are key factors when it comes to deciding to buy. Homeownership allows people to grow wealth slowly over time, to hold assets that build equity, and to bring stability into chaotic lives.

Despite these facts, homeownership rates have taken a hits since the recession in 2009. Falling home prices along with reduced access to credit has kept many would-be buyers from entering the market. According to Morgan Stanley, the current homeownership rate is around 59.2%. This is lowest rate since the Census Bureau began tracking in 1965. Has this reduction been a fear-based one?

The top benefits of homeownership haven't changed, even in the face of a down economy. Here are the top five:

1. Savings: Be sure to check out the calculator at the end of this article. You'll find that long-term homeownership is still a way to get big savings.

2. Tax Breaks: They're not on the chopping block just yet. Many homeowners are still able to take the mortgage interest deduction (MID) each year, along with great rebates and credits associated with upgrades made to your home.

3. Equity: When you pay a landlord, it's money down the drain. When you pay on a mortgage, you are paying towards owning a piece of something. You may still owe $100,000, but perhaps the home is worth $200,000. This means you have $100,000 worth of equity you've built up over time.

4. Budgeting: Unless you live in a rent-controlled apartment (and not many do), then each lease renewal could mean a jump in prices. A fixed-rate mortgage, however, means your monthly payment is the same amount for the life of the loan. A $1,000 a month payment on a 30-year mortgage is that same now as it will be in 30 years!

5. Security: When you own, it's yours. You can paint, improve, and decorate. The trees and flowers are yours to enjoy -- for a lifetime if you wish. Most homeowners are in neighborhoods with other homeowners, meaning more time to build relationships and friendships. Recent studies have also shown that homeowners rank themselves as healthier than their renter counterparts.

Should you rent or buy? For a strictly financial evaluation, be sure to check out The New York Times' Interactive calculator to crunch the numbers. This advanced calculator takes into account everything from yearly costs to selling costs and broker fees.

Experts have recommended for years that if you're planning on staying put for 5+ years, buying becomes an increasingly better deal. You have time to recoup any extra expenses found in closing costs and are now making an investment in your future through home price appreciation. Once your mortgage is paid off, you'll have a real asset. That brings real stability.

Home affordability is at near record highs. Now is a good time to run the numbers and see if buying makes good financial sense. If it does, then you're in store for a wealth of benefits that only homeowners can experience.


Written by Carla Hill
August 30, 2011

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Real Estate Outlook: Affordability Remains High

When it comes to home affordability, levels are at near record generational highs.

The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) indicates that in today's market "72.6 percent of all new and existing homes sold in the second quarter of the year were affordable to families earning the national median income of $64,200."

There are smaller markets that see an even higher rate of affordability, such as Kokomo, Indiana, where 95.8 percent of homes sold during the second quarter of 2011 were affordable to families earning the area median income of $59,100.

"At a time when homeownership is within reach of more households than it has been for more than two decades and interest rates are at historically low levels, the sluggish economy and the extremely tight credit conditions confronting home buyers and builders remain significant obstacles to many potential home sales," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB).

Unfortunately, this high level of affordability, alongside historically low interest rates, has not translated into more sales. Existing-home sales declined in July, down 3.5 percent from June.

Lawrence Yun, NAR chief economist, said there is a tug and pull on the market. “Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,” he said. “Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs.”

Regionally, existing-home sale were down in just the South (-1.6) and West (-12.6). The Midwest experienced a 1.0 percent growth rate, while the Northeast rose 2.7 percent. All regions have experienced double-digit gains over July 2010. The largest increase was seen in the Midwest, which saw existing-home sales rise 31.3 percent year over year.

The NAR reports that the national median existing-home price was $174,000 in July, down 4.4 percent from July 2010. Distressed homes still made up nearly 1/3 of the market, at 29 percent.

The delinquency rate for mortgage loans increased for the second quarter of 2011, up to 8.4 percent of all loans outstanding.

According to the Mortgage Banker's Association's (MBA) Chief Economist, Jay Brinkmann, "While overall mortgage delinquencies increased only slightly between the first and second quarters of this year, it is clear that the downward trend we saw through most of 2010 has stopped. Mortgage delinquencies are no longer improving and are now showing some signs of worsening. The good news is the continued decline in long-term delinquencies, those mortgages that are three payments or more past due. The bad news is that drop is offset by an increase in newly delinquent loans one payment past due."

Yet, the temporary decline in foreclosures that some analysts attribute to a temporary pause for lender or judicial procedural reviews, could instead be a true decline in foreclosures.

The MBA reports that "foreclosure start rates fell to their lowest level since the fourth quarter of 2007. Foreclosure inventory rates also fell, to their lowest level since the third quarter of 2010. While some have argued that this drop in foreclosures is a temporary drop which does not reflect the problems yet to come, this does not appear to be the case, at least at the national level. There are still many problem loans that need to be resolved, but the idea that there is a growing backlog of loans being held back from foreclosure is simply not supported by these numbers. The percentage of loans 90 days or more past due continues to fall along with the foreclosure rate, and is at the lowest point since the beginning of 2009. Were there a growing backlog, we would expect to see the 90-plus day delinquent category increasing."

Without this backlog, foreclosures could be losing steam, meaning prices and the market as a whole could be headed toward stabilization.


Written by Carla Hill
August 29, 2011

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

The Basics of Homeowners Insurance

Buying a home is likely the biggest purchase you'll ever make. It's important to protect this investment. This is where homeowners insurance comes in.

As a renter you may have been required to carry "renter's insurance," which was likely a basic plan that covered property losses and damages in case of an accident at which you were at fault, such as fire.

A homeowners policy has to cover so much more. Your possessions now extend on past jewelry and electronics and must protect everything from shingles and flooring to your life savings.

According to Wells Fargo, "Homeowners insurance provides you with broad coverage for losses that can arise while owning or renting out your home – like damage to your personal property, theft and vandalism, and liability coverage for accidental injury to another person or property."

In the aftermath of disaster, whether from fire, tornado, theft, or liability lawsuits, repairs and replacement costs add up fast. The majority of Americans would be unable to come up with the cash needed to return life back to normal.

So, in response, you purchase insurance. Each year you pay a premium. The amount is based on numerous factors, including the value of your home and the location where you live in. Some areas have higher crime rates, greater risks of wildfire, or have multi-million dollar homes. These policy owners will likely pay more than others.

Be sure to ask your insurance provider for the specifics of what your policy covers. You want a policy that gives you the right amount of coverage. Ask about add-ons, such a flood and earthquake policies. According to Allstate Insurance, "Typically, floods and earthquakes are excluded from basic policies, but in some areas, you may be able to get supplemental insurance policies for those situations. A few other conditions most companies specifically exclude are mold, fungus, wet rot, dry rot and bacteria."

Accidents do happen, and with a battery of lawyers around every corner, you want to be sure you're protected if someone injures himself on your property. Guest medical policies also pay for medical expenses should a person injure himself on your land.

In the instance that you must file a claim, you will need to pay a "deductible." This amount ranges from a few hundred to several thousand dollars. Let's say, for example, that you have a fire. The total dollar amount of damage is $10,000. Your policy covers the fire, so you only pay the "deductible," say $500. This is much more manageable for most households.

To cover not only your property losses in this fire, but also your possession, you will need to have proof of what you had. A home has been recorded on the tax roll, but possessions are your own private property. Homeowners should create an itemized list, updated yearly, that gives evidence of what possessions they have and how much they're worth.

You want a policy that has replacement cost coverage, not just the present value. If you lose a mattress in the fire, it will cost you $1,000 to replace, not $50 (the price it might be worth now). In order to have proof of your possession, consider making a video or photo diary.

Most importantly, keep a copy of this diary and itemized list at a second location away from your home, such as at a trusted relative's house or in a safety deposit box.

If you have a mortgage on your home, you may be required to carry Homeowners Insurance. The reasoning behind this logic is simple. You are not the "owner" of your home until you have completed your loan obligations. Until that point, the bank or lender is the legal "owner." They want to be sure their investment is protected.

For those who own their home outright, homeowners insurance is not required by law, but it would be a crime not to carry it.


Written by Carla Hill
August 12, 2011

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Stop Renting and Buy While Homes are Most Affordable

If you're currently renting and have dreamed of owning a home, now may be the perfect time. Trulia.com is reporting that during the month of July, buying was cheaper than renting in 74% of the country's 50 largest cities.

However, in 12% of the cities, such as New York, Seattle, and San Francisco, you could rent a place for less than you could buy one. And in the rest of the cities (14%), it was about even, with renting being only slightly less than the cost of buying.

What's tipping the scale to make buying cheaper than renting? Of course, it's the declining home prices and historically low interest rates are also helping to encourage home buying. Recently, interest rates for 30-year and 15-year fixed have been hovering near 4%. Also, the increased demand for rental units is pushing rents up, making now a good time to buy as purchasing a home is cheaper than renting one in most major U.S. cities.

This is making purchasing a home enticing for those who are planning to stay for several years and have the ability to put down a downpayment of about 20 percent.

Where are the hot buying markets? Las Vegas tops the list. The S&P/Case-Shiller home price index, as reported by CNNMoney.com, shows that prices "have plunged more than 59% from their August 2006 peak."

Other markets where buying beats renting include Detroit, Michigan; Mesa, Arizona; and Fresno, California. All of these are places where the cost of a median price condo/townhouse is approximately seven times annual rent.

And as reported by CNNMoney.com, Arlington, Texas; Sacramento, California; Phoenix, Arizona; and Jacksonville, Florida, "all had buy-rent ratios of eight," according to Trulia.

New York is the highest city to rent a home (of the 50 markets surveyed). And to buy in that city would cost about 36 times as much, pushing the purchase price to about a million dollars.

If you're renting now and wondering is this the right time, it really depends on your particular circumstances. Timing the real estate market is never a perfect science. However, the indicators are strong that if you can afford to buy, today's market certainly offers many good opportunities.

Here are a few things to consider to help you make your decision.

The first is the length of time you'll stay in the home. Moves are costly and purchasing a home requires extra cash for commissions and closing costs. So, if you're not sure you can stay for a while, postponing buying might be the right choice. However, if you've been in your rental for a long time and have roots in your city, there are great deals on homes. It might be the right time for you to start paying your own mortgage instead of paying your landlord's mortgage.

How much downpayment? This is a critical concern. With stricter lending requirements, having cash to put down is a make-or-break factor in purchasing a home. Buyers often have to come up with 20% and that can be a big chunk (or even all) of a person's savings. Also, note that the money usually has to be "seasoned". In other words, the downpayment money can't just suddenly appear in your savings account only days before you decide to buy a home. Ask your real estate agent and loan officer for more details.

The cost of owning a home. Part of the thrill of owning a home is the fact that you own it. That means you're responsible for everything inside and out. Of course, planned developments and Homeowner's Associations may cover some of the outside maintenance but then you'll be paying monthly fees. When considering whether to buy or rent, one of the things many first-time buyers neglect to think about is the cost of maintenance. When appliances break; you, the homeowner, will pay to fix them. No more landlord or apartment manager to the rescue. So, if you think things through and weigh the cost of rent versus the cost of buying, you may find the cost and the increased responsibility are well worth it because along with homeownership comes the pride of making your home yours exactly as you like it.


Written by Phoebe Chongchua
August 19, 2011

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

The Basics of Homeowners Insurance

Buying a home is likely the biggest purchase you'll ever make. It's important to protect this investment. This is where homeowners insurance comes in.

As a renter you may have been required to carry "renter's insurance," which was likely a basic plan that covered property losses and damages in case of an accident at which you were at fault, such as fire.

A homeowners policy has to cover so much more. Your possessions now extend on past jewelry and electronics and must protect everything from shingles and flooring to your life savings.

According to Wells Fargo, "Homeowners insurance provides you with broad coverage for losses that can arise while owning or renting out your home – like damage to your personal property, theft and vandalism, and liability coverage for accidental injury to another person or property."

In the aftermath of disaster, whether from fire, tornado, theft, or liability lawsuits, repairs and replacement costs add up fast. The majority of Americans would be unable to come up with the cash needed to return life back to normal.

So, in response, you purchase insurance. Each year you pay a premium. The amount is based on numerous factors, including the value of your home and the location where you live in. Some areas have higher crime rates, greater risks of wildfire, or have multi-million dollar homes. These policy owners will likely pay more than others.

Be sure to ask your insurance provider for the specifics of what your policy covers. You want a policy that gives you the right amount of coverage. Ask about add-ons, such a flood and earthquake policies. According to Allstate Insurance, "Typically, floods and earthquakes are excluded from basic policies, but in some areas, you may be able to get supplemental insurance policies for those situations. A few other conditions most companies specifically exclude are mold, fungus, wet rot, dry rot and bacteria."

Accidents do happen, and with a battery of lawyers around every corner, you want to be sure you're protected if someone injures himself on your property. Guest medical policies also pay for medical expenses should a person injure himself on your land.

In the instance that you must file a claim, you will need to pay a "deductible." This amount ranges from a few hundred to several thousand dollars. Let's say, for example, that you have a fire. The total dollar amount of damage is $10,000. Your policy covers the fire, so you only pay the "deductible," say $500. This is much more manageable for most households.

To cover not only your property losses in this fire, but also your possession, you will need to have proof of what you had. A home has been recorded on the tax roll, but possessions are your own private property. Homeowners should create an itemized list, updated yearly, that gives evidence of what possessions they have and how much they're worth.

You want a policy that has replacement cost coverage, not just the present value. If you lose a mattress in the fire, it will cost you $1,000 to replace, not $50 (the price it might be worth now). In order to have proof of your possession, consider making a video or photo diary.

Most importantly, keep a copy of this diary and itemized list at a second location away from your home, such as at a trusted relative's house or in a safety deposit box.

If you have a mortgage on your home, you may be required to carry Homeowners Insurance. The reasoning behind this logic is simple. You are not the "owner" of your home until you have completed your loan obligations. Until that point, the bank or lender is the legal "owner." They want to be sure their investment is protected.

For those who own their home outright, homeowners insurance is not required by law, but it would be a crime not to carry it.

by Carla Hill, Published: August 12, 2011

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Should I Buy?

The amount of material promoting home buying is extensive. Financial and real estate experts from across the country know that today's market conditions are heavily weighted in favor of buyers. Interest rates have never been lower. Home values are more affordable than they've been in decades.

Yet, does this mean now is a good time for you to buy? That depends on a number of personal and financial factors. To really understand if you should enter the market, you must look at what homeownership means.

Irresponsible buying or borrowing could be detrimental to our already fragile economy. Homeownership is a long-term financial responsibility. It brings with it many social, and sometimes financial, rewards, but like any commitment should not be entered into lightly.

First and foremost, how stable is your employment? Has your company been experiencing lay-offs or are they hiring?

Next, do you have at least an 8-month emergency fund in case you get laid off or become too sick to work? If not, things could quickly spiral out of control. Losing your home could spell disaster for your credit, leaving a black mark for 7 years.

Many potential buyers today are unable to attain a mortgage due to bad credit. This has created a multi-month supply of homes for sale. Will you need to sell your current home in order to buy a new one? Today's market, which is full of foreclosures and short sales, is difficult for many sellers.

Yearly homeownership expenses also extend on past the monthly mortgage check. Can you afford property taxes, homeowners insurance, and maintenance and upkeep? Currently, homeowners paying on a mortgage can take the Mortgage Interest Deduction (MID) off their yearly taxes. This deduction is on the chopping block, however. Although, your property taxes would likely be more than you'd save with the deduction.

Real estate can be a way to build long-term wealth. Your home can be one of your largest assets. These do not happen overnight, however. Are you planning on remaining in your new home for at least 3 to 5 years? It will take at least that long for you to break even financially when you sell. You will put cash down to buy it and will pay closing costs to sell it, many times to the tune of several thousand dollars.

What if home values continue to fall? Are you buying for reasons other than building equity? Why do you want to buy? In today's market, housing is affordable. It could be years, however, until your home begins to build equity. By the time you put 20 percent down, pay closing costs, and perform repairs and maintenance, returns can be quite slim.

Owning certain homes in specific neighborhoods can be a sign of status. You should be strongly cautioned that "keeping up with the Joneses" is not a valid reason to buy a home, especially in today's economy. Just ask a good portion of homeowners currently in foreclosure. Over 30 percent of all real estate transactions today are all-cash. While a certain percentage of these are investors, it means that many buyers are purchasing home "within their means."

The majority of homeowners, though, would recommend buying to family and friends. This is becasue homeownership instills a sense of community and stability. Studies have shown that homeowners rank themselves healthier than non-homeowners. Children of homeowners are less likely to become teen parents and are more likely to graduate.

Having a place of your own can be priceless. Just be sure you are truly ready to buy before entering the market.

Published: August 9, 2011

by Carla Hill

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

10 Tips for Those Who Have Decided to Buy

Wanting to buy a home and deciding to buy a home are two different things. The first is a desire or a dream. The second is commitment to achieve the goal. Do you want to buy, or have you decided to buy?

What are you planning when you think of purchasing real estate, whether it's a house, condominium, cottage, or investment property? Is this something you'd like to do, but could be dissuaded from if it seems too hard, or your life becomes busy? Or, is this a goal you take on with determination to overcome barriers and maximize strengths?

If you are ready to commit to success, you are determined to replace wanting to buy withdeciding to buy. Here are 10 tips to help you on the path to real estate ownership.

1. Decide who will facilitate your buy The professional team you put together can make all the difference. You're not looking for new friends, so concentrate on credentials and experience. Salespeople are trained to be personable, so if someone is likeable that's nothing special. Their knowledge and ability to strategize on your behalf does matter. The real estate professional you select must be as convinced as you are that you can be successful and understand how to make success happen.

2. Decide when will you buy Buying a home, cottage, or investment property is not something to rush into, but taking a long time does not necessarily make your choice a better one. A recent online survey by Canada Mortgage and Housing Corporation, the national housing agency, revealed that Canadians take, on average, 11 months to plan their purchase. That means sometimes the process takes longer than a year, and sometimes things happen more quickly. To facilitate a sound buying decision, project ahead three months at a time to see what external factors in your life and career might disrupt buying momentum, or add additional advantages to the timing. Possibilities of interest rate increases and price fluctuations are difficult to pinpoint for even the most informed experts, so prepare to respond to any shifts commonly predicted for your chosen location. Keep in mind, that if your Offer to Purchase were accepted today, you would probably not move in for 30 to 90 days depending on the sellers' plans and yours. Tip: The more pressure you put on yourself to adhere to a specific move-in date, the less flexibility you'll have in purchase negotiations regarding price and terms.

3. Decide where you will buy Location is still the key factor in sustainable value and rate of appreciation over time. The best returns come from buying the best location you can afford—neighbourhood and street, or condominium complex and floor. You can renovate or rebuilt the structure or unit, but you cannot move the land or condominium complex. Location matters. Spend time discussing your choice of housing, neighbourhoods, and special features like in-law suites or separate apartments with your professional advisors before you start looking at properties.

4. Decide which you will buy It's not how many properties you view that will ensure success, but whether you see the property that best suits your needs, wants, and decision making. One strategy involves acting quickly with newly-listed properties, another stresses the hidden value in slow-to-sell real estate. You may decide to stay on alert for new listings in the best neighbourhood and on the best street you can afford. Time invested in preparation will enable you to act quickly when the ideal property hits the market. If you decide on the alternate strategy that seeks purchase-price advantages with properties that do not show well, still search out the best location you can afford. Here, you'll view tired or poorly-decorated condominium units or houses, and revisit with contractors and decorator to evaluate true potential.

5. Decide what you will buy Stay on point and avoid getting carried away. Your buyer agent will help keep you focussed, but you need to be sure you know what features you want and need, and why. Does proximity to schools or public transportation matter? What will your home-based business require? Will an income-suite enable you to buy an even better location? Is this a fixer-up property that will build your financial strength, so you can eventually buy your goal property, or are you here for the long haul? Write your must-have list down and check it when you view properties and before you make an offer.

6. Decide what value you can add Do you have skill with interior design or home renovation? Or, will you hire the expertise you need? Concentrate on improvements that increase functionality, affordability, comfort, and resale, not just changes in decor. What professional skills can you add to the search, analysis, or decision making?

7. Decide what buying will cost Set a budget for the entire project, not just the mortgage. Your real estate professional can help prepare a full financial projection of costs. For more on mortgages, see “Mortgages: 7 Things You Don't Want to Learn the Hard Way.”

8. Decide how you measure success Short of having your Offer to Purchase accepted, how will you know how well you're progressing? What ongoing evaluation criteria does your real estate professional suggest? If you don't track time and the properties you've seen, you may become overwhelmed with detail and confused by the continually changing real estate market. While you're set on your decision to buy, interest rates, the economy, and many other variables may change. Focus is the key. Organization will ensure your success.

9. Decide what's unique to your situation What considerations or challenges must you take into account that may not be true for all buyers? Do you have a property to sell before you can buy? Do you have special mobility needs, or design features like higher ceilings or a detached garage that are important to your hobbies or business? Share this information with your real estate professional at the start, so they have the full picture of your needs.

10. Decide: What's the point of buying? This decision must come first and stay first as you go. There are many great reasons for buying real estate, but what are yours? Not reasons you've been told to buy or think you should, but why you know you're prepared to invest time and effort on the quest. When your point or purpose in buying is crystal clear, you can weigh the relative merits of the properties you view, and the many small decisions that must be made on the way to the first big step: Have you decided to make an offer?

Published: August 9, 2011

On RealtyTimes.com by PJ Wade

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Mortgage Rates Hit Record Lows Amid Signs of Weakening Economy

MCLEAN, Va., -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates dropping sharply amid falling bond yields and signs of a weaker than expected economy. The 30-year fixed averaged 4.39 percent, its lowest level for 2011. The 15-year fixed and 5-year ARM set new historical record lows averaging 3.54 percent and 3.18 percent, respectively. 30-year fixed-rate mortgage (FRM) averaged 4.39 percent with an average 0.8 point for the week ending August 4, 2011, down from last week when it averaged 4.55 percent. Last year at this time, the 30-year FRM averaged 4.49 percent. 15-year FRM this week averaged 3.54 percent with an average 0.7 point, down from last week when it also averaged 3.66 percent. A year ago at this time, the 15-year FRM averaged 3.95 percent. 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.18 percent this week, with an average 0.6 point, down from last week when it averaged 3.25 percent. A year ago, the 5-year ARM averaged 3.63 percent. 1-year Treasury-indexed ARM averaged 3.02 percent this week with an average 0.5 point, up from last week when it averaged 2.95 percent. At this time last year, the 1-year ARM averaged 3.55 percent. Frank Nothaft, vice president and chief economist at Freddie Mac, reports, "Treasury bond yields fell markedly after signs the economy was weaker than what markets had previously thought allowing fixed mortgage rates to follow this week with the 15-year fixed and 5-year ARM setting new historical lows. The economy grew 1.3 percent in the second quarter, which was below the market consensus forecast, and first quarter growth was cut to less than a quarter of what was originally reported. In fact, the first half of this year was the worst six-month period since the economic recovery began in June 2009. Moreover, consumer spending fell 0.2 percent in June, representing the first decline since September 2009." "On a positive note, there were indications that the housing market is firming. Real residential fixed investments added growth to the economy in the second quarter after subtracting from growth over the first three months of the year. The CoreLogic® National House Price Index rose for the third straight month in June (not seasonally adjusted) and was the first three-month gain since June 2010. Finally, pending existing home sales rose for a second consecutive month in June and was up nearly 20 percent from June 2010 when the housing tax credits expired." Published August 5, 2011 On RealtyTimes.com Thinking about Buying or Selling? Call Alvin's Team Today! 877-651-7810 Or visit our website: www.LivingLakeTahoe.com

Mortgage Rates Consistently Stable Despite Debt Ceiling Issues

Last week, markets appeared somewhat optimistic with mortgage rates remaining consistently stable despite debit ceiling issues and talks that fell apart prior to the weekend. It seems as though things may change this week as the deadline looms and an agreement has not been reached. Regardless, it is still a good time to lock in mortgage rates that are still at the lowest levels of 2011.

Freerateupdate.com's daily survey of wholesale and direct lenders show that conforming 30 year fixed mortgage rates are at 4.250%, 15 year fixed mortgage rates are at 3.375% and 5/1 adjustable mortgage rates are at 2.625%. These low mortgage rates with 0.7 to 1% origination fee are available for borrowers who have maintained good credit and can provide the necessary documentation to receive lender approval. The Mortgage Banker's Association reported the largest increase in refinances for the week ending July 15th which is evidence that borrowers are jumping on this opportunity while it is here.

For those with less than perfect credit, low FHA mortgages rates are still very competitive with conforming mortgage rates, either at the same level or slightly higher. FHA 30 year fixed mortgage rates are at 4.250%, FHA 15 year fixed mortgage rates are at 3.750% and FHA 5/1 adjustable mortgage rates are at 3.000%. With a minimum credit score of 580, FHA will accept a down payment as low as 3.5% which can be combined with housing grants and approved gifts. FHA mortgage loans are consumer friendly and continue to be the choice of first time home buyers, even though FHA closing costs (APR) tend to be higher because of the upfront mortgage insurance premium and other FHA fees.

Jumbo 30 year fixed mortgage rates moved up and down by .125% and are now at 5.000%. Jumbo 15 year fixed mortgage rates are at 4.500% and jumbo 5/1 adjustable mortgage rates are at 3.625%. These low jumbo mortgage rates are available with 0.7 to 1% origination point to borrowers who have excellent credit. The jumbo mortgage market is not over saturated right now because of the higher conforming loan limit. If that limit decreases on schedule in October, this might change since many properties will again fall into the jumbo mortgage market. There is currently a bill in Congress to further extend the conforming loan limit which, if approved, will help to keep jumbo mortgage rates low.

Although investors appeared optimistic last week, MBS prices (mortgage backed securities) fluctuated slightly which had little to no affect on mortgage rates. As MBS prices move, so do mortgage rates move in the opposite direction. Better than expected housing starts for the month of June and a new Greece debt deal led investors to turn to stocks. Markets saw little reaction to the report that weekly jobless claims increased higher than expected. This week can turn out to be completely the opposite as tension sets in over the debt ceiling deadline which is August 2nd. With both parties so far apart on ideas and no sign of an agreement, concern is already influencing markets as MBS prices are starting to drop.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1% point origination fee.


Written by Ed Ferrara
July 27, 2011

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