The National Association of Realtors is presently lobbying Congress with a full court press to extend the 1^st time home buyers tax credit. The extremely successful tax credit which Congress enacted to help prop up the devastated real estate market is due to expire on November 30^th. To clarify, if you qualify for the tax credit your purchase needs to close by the 30^th of November.

Presently there are limitations to qualify for the $8,000 tax credit. You need to be a first time home buyer which is defined as never owning a home previously or not owning a home within the last three years. There are also income limitations to qualify which are $75,000 for a single person and $150,000 for a joint couple.

In the previous months real estate sales have been up mostly in part due to the looming deadline of the tax credit. The National Association of Realtors is looking to get the tax credit extended into next year and remove the income limitation.

It would be in Congress’s best interest to extend the tax credit but only time will tell if that happens and seeing as the deadline is November, 30 LoanClassroom will be updating this info as soon as we get any new info.

In the month of May we now have reports that existing home sales rose slightly for the third straight month, existing sales rose 2.4 percent. The other report is the sale of new homes. The number for new home sales in May edged down 0.6 percent according to the Commerce Department.

As a whole home prices continued to fall and seem likely to continue the trend as the year goes on. Roughly one in every three homes sold was a foreclosure or some sort of distressed sale. That helped push the median home price to $173,000 nationwide down 16.8 percent from a year ago.

The results for new and existing home sales fell below economists’ expectations. The little glimpses of recovery in housing may be stalling as the inventory of distressed and foreclosed homes remains making it harder for the new home inventory to churn through. Besides the fact that mortgage rates have jumped in the past month may daunt any hopes that anyone may have had for a recovery this year. I am optimistically holding strong to a recovery that will have some base behind it in the spring of 2010.

When I say recovery I am not saying home values strongly increasing, I am a believer over the next 10 months or so we can get through some inventory and plug some of the holes that are still open in today’s housing market. Then and only then we can we talk about recovery and the future. In the meantime if you are in the market to buy there are some great deals out there for the taking.

Before you take the plunge to purchase a condo you should take a look at LoanClassrooms list of important questions that you need to ask and be aware of before making any offers to buy a condominium.

·         If you are getting FHA financing not all condo’s are FHA approved. Make sure you know what condominium complexes are FHA approved before you make any offers.

·         In today’s mortgage market smaller condo complexes are harder to finance. Typically complexes less than eight units are considered “small complexes”

·         Ask what the investor concentration is, most lenders will not lend if a complex has a lot of units that are investment properties. If you are an investor you need to check the opposite. Make sure that you can rent your unit out as an investment property.

·         Who runs the condo association? Is it a management company? Are there appointed board members?

·         Is the condo a conversion? What that means is the condo a conversion of an apartment complex? Lenders these days are strict with condominiums this is a sticky one

·         How many units in the complex are un-sold? If you are buying a new construction condo this is for sure an important question

·         If the condo is an established project what kind of shape is the condominiums reserve fund in?

·         Take a look at the master insurance policy to see what exactly is covered under their policy and how much

·         Are there any “special assessments up-coming”? The common fees per month may be manageable now but a lump sum assessment later may be a problem

There is a new bill that hit the Senate floor. Senate bill, S. 1230, The Home buyer Tax Credit Act of 2009 is underway. The bill proposed by Sen. Johnny Isakson, D-Ga. Is a replacement to the present $8,000 tax credit that first time home buyers can receive upon closing of a home before November 30^th of this year.

The bill expands on the tax credit, making it available to anyone who purchases a principal residence in the year following the bill’s enactment. The bill also would do away with income limitations of $75,000 for individuals and $150,000 for joint filings. The new bill would reach all walks of life and income levels.

The bill went to a Senate finance committee last week, where it awaits further action. The passing of the bill could help the potential for a slow-down in home buying as mortgage rates have rose sharply in the past month. Almost doubling the tax credit and making the credit available to not only first time home buyers but “all buyers” could help tremendously. It would certainly move some buyers on the fence since rates have gone up to re-evaluate buying a new home in taking the $15,000 tax credit into consideration. LoanClassroom will certainly keep you up to speed as the bill progresses through the Senate.

The NAHB (National Association of Home Builders) said their housing market index fell by 1 point in June. A number under 50 would indicate negative sentiment according to the NAHB. The index fell to 15 in June the first decline since the index hit an all time low of 8 in January. The index is based on 500 or so residential builders nationwide and is a reflection of their perceptions of the market.

The numbers for pending and existing home sales have increased as of late. Mortgage rates will be an important factor for the second half of this year. Any increase in home sales whether it be new construction or existing homes in the first half of the year was due in part to the first time home buyer credit and low mortgage rates. Now with mortgage rates up well over a full point in the past month it will play heavily on home sales for the rest of 2009.

You want to talk about irony? Treasury Secretary Timothy Geithner is not immune to the housing crisis, in fact he just maybe he might a little too more in tune than he would care to be. As Treasury Secretary Geithner is the one who is the economic advisor to President Obama. He is basically the lifeline of economic policy and info for the President.

In an article first reported by the AP (Associated Press) Geithner has been un-able to sell his New York home. Records showed that in 2004 he and his wife purchased the home for just over $1.6 million. It had been on the market for a while and was last listed for $1.575 million. The Geithner’s decided to rent the home after no offers materialized. The home is rented for $7,500 per month. It goes to show that no one is immune to the housing crisis. Here is the link to original “AP” article.         Geithners Housing Woes

The largest monthly jump in over 7 years, those were the April 2009 figures for homebuyers purchasing existing homes. U.S. pending home sales rose 6.7 percent in the month. The last time pending home sales showed such a large increase was October 2001.

The jump in numbers is reflective of several catalysts. For starters mortgage rates have been in the 4’s which is historically low. Combine that with the $8,000 tax incentive for first time home buyers and some drastically reduced home prices due to short sales and foreclosures we have seen an uptick in home sales.

On the surface the numbers are without a doubt encouraging. There are some key hurdles that still need to be jumped. For starters there is typically a one to two month lag between the signing of the purchase contract and closing. Some banks and lenders are taking thirty days or more just too initially approve the loan. So the index is a good indicator of future existing home sales.        

The hurdles that we are going to face are rising interest rates. Last week Eversley Capital Mortgage in Norwalk, CT was quoting mortgage rates near 4.5 percent and today rates are above 5 percent. Average rates today are around 5.25 percent. That does not bode well for future buying activity if the rates do not subside. Unemployment is still climbing and really has no sign of leveling off until early next year. That in turn will continue to increase foreclosure and default rates on existing mortgages which could continue to dampen home values.

The National Association of Realtors index of pending sales contracts has risen three consecutive months in a row now. The Northeast had the largest jump, nearly 33 percent, while the Midwest rose just over 9 percent and the South and West were flat. Obviously there are still some massive bumps in the road yet but if nothing else these numbers give us the reminder that at some point things are going to turn around, it may not be this year as some economists have stated but it will be soon to come.

One man’s garbage is another man’s treasure.

That is an age old analogy that to this day holds true. We all do it, when asked what the value of our homes or belongings are worth we tend to exaggerate the number a little. I think that is human nature.

Well in an article that was in the Wall Street Journal and posted on Yahoo finance there are apparently let’s say differences of opinion where Donald Trump’s net worth is concerned. According to “the Donald” his real estate empire ranges in the billions. Some have put that number in the high 9 figures, a far cry from billions let alone the reportedly $4 billion number that was thrown out there at one point.

In the end who really knows? An item is only worth what someone in the end is willing to pay for it. The true value is always in the eye of the beholder. Here is the article to read:     TRUMP

Rent vs. Own is an age old question. And the answer differs depending on where in the country you want to live. Connecticut is LoanClassrooms backyard so a comparison into CT real estate is what we are going to do.

I recently read an article in the local Norwalk Citizen newspaper. It was an article on rents in the Stamford-Norwalk area. It is what intrigued me to do this comparison.  I read the article and thought it was good stuff.

I was shocked to learn that in the entire US the Stamford-Norwalk area of Connecticut now requires the highest hourly wage to be able to afford to rent an apartment. In a recent report from The National Low Income Housing Coalition they detailed a report on hourly wages needed to afford two bedroom apartments by state, county and metropolitan area. The Stamford-Norwalk area was the highest in the country. Danbury Connecticut ranked 8^th. As a state Connecticut was sixth in the country overall.  The study pegged the required annual income at nearly $70,000 a year to rent a two bedroom apartment in Fairfield County based on a monthly rental amount of $1,750.

Now let’s look at what $70,000 would get you if you were looking to buy a home as opposed to rent in Fairfield County. According to Zillow.com the median price for a 2 bedroom single family home in Norwalk, CT is $375,000. Let’s say you have saved enough to put a 10 percent down payment for a purchase. You put down $37,500 for your down payment and take a mortgage for the balance, $337,500. Based on your mortgage payment of principal and interest, your property taxes, your home owners insurance, an interest rate of 4.875% for a 30 year fixed mortgage and applicable mortgage insurance or (PMI) the housing payment is $2,400. To put that in perspective on an income of $70,000 that is pre-tax $5,833 a month. With a mortgage payment of $2,400 that leaves food, utilities, taxes, insurance, cell phone, food, car credit card, general living expenses yet to be paid. Assuming you are in a 28% tax bracket your take home pay less taxes is roughly $4,100. Meaning $1,700 a month needs to cover all the rest. That is living pretty tight. Not impossible but darn tight.

In summary the old question here is rent vs. own and based on the numbers renting for a while might be the answer at that income level and purchase price. Keep in mind we used 10 percent for a down payment. The average median price for a 1 bedroom single family home is $265,500 in Norwalk, CT. So if you want to own and are in that income level buyers market or not you will have to look hard to find something in your price range in Fairfield County. It is understandable why Fairfield County is the highest income requirement to rent in the country.

The snow is gone, the ground is wet and the smell of spring is in the air. That means the Spring Real Estate Market is here. If you are in the market to buy a home you will certainly come across homes that have been foreclosed.  In February there were roughly 291,000 filings alone. Here are some things that you need to know when buying or putting an offer on a foreclosed home.

·         First of all there are several stages of buying a foreclosure. You can actually go to the auction and bid on the house. You need to be aware that the standard requirement is posted in the paper for the down payment. It is typically 10 percent of the estimated value and the funds need to be certified or a cashiers check.

·         If you are the highest bidder and have your funds ready, you have typically 30 days to close on the purchase. Make sure your mortgage is good to go or you could be at risk

·         Aside from going to the auction, nowadays it is more common for the lender to foreclose and then list it with an agent. He takes your offers to buy and works on behalf of the bank or lender.

·         Buyer beware, foreclosure sales are as-is. So if you are putting an offer on a home that was foreclosed and bank owned make sure you get an inspection before-hand. If not you may be in for more than you bargained for.

·         If you are looking at a foreclosure as an investment think long term. This is not a “quick” flip market. Six months minimum, if you know what you are doing you may be able to make a good profit. But the key is being able to hold the property for a while.

·         Often times there are liens or back taxes that are due on foreclosed homes. Have your attorney do a search to make sure that you are not stuck with the previous owners tax debt.

·         Do your homework with the bank or the real estate agent representing the bank to find out depending on where you live if the home was “winterized” before the utilities were turned off. You may also want to make sure the utilities are in working order before buying. Besides most lenders or banks want the utilities in working order before they lend you money for a mortgage anyway. However if by chance that is not the case you should investigate.