Wednesday, 21 March 2012
Spring has definitely sprung in Pittsburgh. The birds are singing, everything is blooming, grass is growing and even the air smells fresh. It's a great time to be out and about in the 'Burgh.
It's also a great time to buy a home. Homes have not been this affordable since 1991. According to Fiserv Case-Shiller, the ratio of median home price to median family income is 2.6, down from a peak of 4.1 in mid 2005 and just under the long term average of 2.8. Average principal and interest mortgage payments have fallen from $1063 to $645.
Interest rates have been at all time lows but it looks like the party is about to be over. Two of our clients were recently locked in at rates of 3.5% and 3.75% for 30 year fixed mortgages. A few years ago you couldn't buy a car at that rate. Freddie Mac forecasts a 30 year fixed rate of 5% by end of summer and 6% by late 2012, early 2013. Credit is becoming tighter and you will need a higher credit score and possibly a larger downpayment to qualify for the lowest rates.
In a previous blog post, we reported that college students are graduating with all time high debt and poor job prospects. Many are moving in with their parents, but many others are taking jobs outside of their field of study and renting homes or apartments. In addition, in this area, we have the Marcellus Shale workers. Rentals are becoming more expensive and harder to find. We recently talked to a young couple who are paying $1400 / month for a nothing special apartment. They are purchasing a home and their mortgage payment, including taxes and insurance, will save them $400 / month. In addition, it's much closer to work and they have estimated it will save them another $2000 / year in gas.
In the Pittsburgh area, prices have hit bottom and are on the way back up. People always want to wait until the bottom to buy, but when do you know when the bottom has been reached? When prices start increasing. We are on the upswing. More buyers are out in the market, inventory is getting more depleted, multiple offers are becoming a little more common. These are all signs that the market is recovering.
The weather is great - all buying factors are favorable. It's a great time to look at the possibility of buying a home. Need help? We're here for you. Call or email and we'll set up a personal consultation to explore your options.
Wednesday, 10 November 2010
It’s getting tougher to get approved for a mortgage. Still.
In its quarterly survey of senior loan officers around the country, the Federal Reserve asked whether “prime” residential mortgage guidelines” have tightened in the prior 3 months.
A “prime” borrower typically carries a well-documented credit history with high credit scores, has a low debt-to-income ratio, and uses a traditional fixed-rate or adjustable-rate mortgage.
For the period July-September 2010, 52 of 54 responding loan officers admitted to tightening their prime guidelines, or leaving them “basically unchanged”.
Just 4% of banks loosened their lending standards.
If you’ve applied for a home loan lately — for either purchase or refinance — you’ve likely experienced the effects of the last 4 years. Because of delinquencies and defaults, today’s mortgage underwriters are forced to scrutinize income, assets and credit scores, among other facets of an home loan application.
Mortgage applicants in Pittsburgh have higher hurdles to clear:
- Minimum credit scores are higher versus last year
- Downpayment/equity requirements are larger versus last year
- Debt-to-Income ratios must be lower versus last year
In other words, although mortgage rates are the lowest they’ve been in history, qualification standards are not. Minimum eligibility requirements are tougher, and appear to be toughening still.
If you’re among the many people wondering if now is the right time to join the Refinance Boom, or to buy a home, consider that, while mortgage rates may fall further, eligibility standards may not.
Low mortgage rates don’t matter if you can’t qualify for them
Wednesday, 03 November 2010
This week marks the start of the Refi Boom’s 7th month across Pennsylvania ; rates have been falling since early-April 2010. Whether you’re looking to refinance or buy a home, however, know that not everyone will qualify for today’s low rates.
Mortgage approvals are primarily based on good income, good equity and strong credit, and, without all three, the best rates of the day remain out of reach. Now, you can’t always ask for a raise and equity is a function of the housing market, but you can do something about your credit score.
In this 4-minute segment from NBC’s The Today Show, you learn some credit basics to help propel your score higher:
- There’s no “quick fix” for credit. Time + Good Credit Behavior = Better FICOs.
- Pay every bill when it comes due. Even one late payment can damage your score.
- Don’t close old credit cards
Also among the segment’s advice is to stop worrying about whether rates have bottomed. Refinance today if it makes financial sense. Then, if, by chance, rates fall in the future, just refinance again. Don’t be greedy, we’re told.
Wednesday, 27 October 2010
In home design, the exterior is as important as the interior. The exterior are your home’s first impression while performing the double-duty of protecting living space from damage and Mother Nature.
And, occasionally, you may want to make upgrades.
For some people, visualizing changes to a home’s exterior is easy. For others, though, there’s the Better Homes and Gardens Color-a-Home tool.
Color-a-Home is a website via which homeowners can test different exterior home designs and color combinations. Using a series of drop-down menus and mix-and-match swatch colors, homeowners can build home exterior mock-ups featuring:
- New roofing
- New siding
- New windows
- New shutters and doors
Better than a mental picture of your home — get an actual picture.
The Better Homes and Gardens site requires basic site registration to use its Color This! product suite. Color This! is also available for home interiors and window treatments.
Monday, 18 October 2010
Despite tougher mortgage guidelines and better loan disclosures for consumers, mortgage fraud is on the rise, according to the FBI.
Fraud has many varieties and it’s estimated cost to the nation is between $4-6 billion annually. Today, common mortgage fraud scams target homeowners behind in their mortgage payments and/or facing foreclosure. And, despite the hordes of legitimate organizations that dedicate themselves to helping consumers, mortgage fraudsters proliferate.
In this 3-minute piece from NBC’s The Today Show, you’ll learn to spot common frauds, and to avoid them.
Some of the frauds highlighted include:
- The Rent-to-Buy arrangement
- The Bait-and-Switch
- The “Phantom fees”
With respect to mortgage paperwork, it’s always wise to read what you’re signing, and to take time to understand what it means. If you’re uncomfortable reading mortgage documents, ask for an attorney’s help. And don’t worry if you don’t have the budget — many states offer free or discounted help via advocacy groups.
Thursday, 14 October 2010
The number of foreclosure filings rose 3 percent in September, according to foreclosure-tracking firm RealtyTrac. The term “foreclosure filing” is a catch-all word for housing, comprising default notices, scheduled auctions, and bank repossessions.
September marked the 19th straight month that the number of filings topped 300,000, and the first month in which 100,000 repossessions were logged.
As usual, a small number of states dominated the national foreclosure figures, accounting for more than half of all repossessions.
- California : 17% of all repossessions
- Florida : 13% of all repossessions
- Michigan : 7% of all repossessions
- Arizona : 7% of all repossessions
- Texas : 5% of all repossessions
- Georgia : 5% of all repossessions
Thankfully for home sellers, mortgage servicers appear to be metering the pace at these newly bank-owned homes are made available to the public. RealtyTrac notes that, in doing so, servicers prevent “the further erosion of home prices”.
That said, distressed properties still sell at a steep discount.
In the second quarter of 2010, the average sale price of homes in the foreclosure process was 26 percent lower than the average sale price of homes not in the foreclosure process. It’s no surprise, therefore, that, based on RealtyTrac’s preliminary data, 31 percent of all homes sold in September were “distressed”.
There’s lot of good deals out there, in other words, but they come with certain risks.
Buying a foreclosed home is not the same as buying a non-foreclosed home. Specifically, you’re buying from a corporation and not from a “person”. Contracts may vary, and so may terms.
Therefore, Washington home buyers — even experienced ones — should talk with a real estate agent before making an offer. It’s important to understand the foreclosure-buying process.
Wednesday, 13 October 2010
The Federal Reserve released its September 21, 2010 meeting minutes Tuesday afternoon. Mortgage rates in Pennsylvania are slightly higher today.
It’s unwelcome news for this season’s home buyers, and existing homeowners with plans to grab lower rates. Mortgage rates made new lows last week and may have reached a turn-around point.
The “Fed Minutes” is published 8 times annually, and is the official meeting recap for the Federal Open Market Committee. Similar to the meeting minutes released after a corporate conference or condo association gathering, the Fed Minutes details the conversation and debate between meeting attendees.
Minutes are the lengthy companion to the Fed’s brief, post-meeting press release.
Because of its content, the Fed Minutes is closely read by Wall Street and economists. It’s insight into the talk that shapes our nation’s monetary policy and, within the text, there’s often clues about the Fed’s next move.
Here’s some of what the Fed discussed last month:
- On inflation : It’s running at lower-than-optimal levels
- On housing : Post-tax credit, housing stalled in July
- On stimulus : The Fed may intervene in open markets within the next few months
The over-riding theme within the minutes was that the U.S. economy is growing a steady pace, albeit slower than what’s optimal. The Fed is prepared to push things along if the economy slows further and news like that is helping stock markets.
Bond markets are losing. Rates are rising.
For now, mortgage rates hover near all-time lows. If you haven’t locked a mortgage rate yet, your window may be closing. Once the economy turns around for certain, mortgage rates will be among the first of the casualties.
Thursday, 07 October 2010
Starting Monday, December 13, 2010, Fannie Mae is changing its mortgage lending guidelines.
For some mortgage applicants of Pennsylvania , the loan approval process will simplify. For others, it will toughen. How you’ll be affected personally will depend on your credit profile and your loan characteristics.
Among the biggest changes from Fannie Mae is a new set of guidelines for gift funds. When the new rules roll out, accepting cash gifts for downpayment will be easier.
Undetr the new guidelines, buyers of owner-occupied, 1-unit properties (i.e. single-family homes, condos, townhomes) can forgo Fannie Mae’s typical, minimum 5% personal downpayment contribution. Downpayments on homes meeting the above criteria can be comprised of 100% gifted and/or granted funds.
Buyers of second homes and multi-unit properties, however, are not exempt.
There’s also two changes pending with respect to revolving debt.
- Debt with less than 10 payments remaining may no longer be waived in debt-to-income ratio calculations
- Debt lacking a monthly payment on credit must be assigned a payment equal to 5% of the outstanding balance
Both of the above should increase the number of loan denials in 2011.
And, lastly, Fannie Mae changes some of its documentation requirements, the most noticeable of which will be with respect to income verification. Salaried workers and applicants whose commission/bonus accounts for less than a quarter of their income will have fewer paystubs to produce for underwriting.
Loan applications taken prior to December 13, 2010 are exempt from the new rules.
Fannie Mae’s complete guideline changes are available online at http://efanniemae.com.
Wednesday, 06 October 2010
Conforming mortgages is so named because, literally, they conform to the mortgage guidelines set forth by Fannie Mae and Freddie Mac.
Of the many traits of a conforming mortgage, one is “loan size” and loan sizes have limits. Mortgages exceeding this loan size limit cannot be securitized as a conforming mortgage and, therefore, are ineligible for conforming mortgage rates.
Conforming mortgage rates are often the cheapest source of mortgage money for residents of Pennsylvania , all things equal.
Each year, the government re-evaluates its maximum allowable loan size based on “typical” housing costs nationwide. Loans in excess of this amount are often called “jumbo”.
Between 1980 and 2006, as home prices increased, so did conforming loan limits — from $93,750 to $417,000. Since 2006, however, home prices have retreated but the conforming loan limit has not.
In 2011, for the 6th consecutive year, $417,000 will be the country’s conforming mortgage loan limit.
Conforming loan limits very by property type. The complete breakdown is as follows:
- 1-unit properties : $417,000
- 2-unit properties : $533,850
- 3-unit properties : $645,300
- 4-unit properties : $801,950
Despite the limits, some parts of the country get “loan limit exceptions”. In areas considered “high cost”, conforming loan limits range from $417,001 to $729,750. High-cost is defined by the median sales price of a region.
Los Angeles County, for example, is a high-cost region, along with a lot of California. There are less than 200 such areas nationwide, though.
You can verify your local market’s loan limit via the Fannie Mae website. A complete county-by-county list is published online.
Wednesday, 06 October 2010
Consistent with calls of a housing rebound, the Pending Home Sales Index rose again in August. It marks the second straight month of improvement after May’s post-tax credit drop-off.
A “pending home” is an existing home under contract to sell, but not yet closed.
According to the National Association of REALTORS®, 4 out of 5 pending homes close within 60 days, and many more close within 90 days. For this reason, the Pending Home Sales Index is an excellent forward-indicator for housing.
As a real-life illustration, after July’s 27% plunge to an 11-year low, Existing Home Sales recovered 8 percent in August. This was not a surprise, though, because July’s Pending Home Sales Index predicted it.
Region-by-region, the Pending Home Sales Index varied in August, suggesting better sales levels in the South and West markets:
- Northeast : -2.9% from July
- Midwest : +2.1% from July
- South : +6.7% from July
- West : + 6.4% from July
That said, real estate markets aren’t “regional” — they’re local. Just as there are improving markets within the Northeast Region, there’s worsening markets in the West. And cities like Washington have their own market traits, too.
Overall, buyers are being drawn into housing by low mortgage rates, affordable homes, and ample supply. If the August Pending Home Sales Index is foreshadowing the fall housing market, home prices appear slated to rise.
Tuesday, 28 September 2010
Existing Home Sales rebounded last month after a lackluster July. New Home Sales data, by contrast, did not.
After an upward revision to July’s data, New Home Sales remained unchanged at 288,000 units in August. It marks the second-lowest number of units sold in a month since 1963, the year government started its record-keeping.
At the current pace of sales, the newly-built home inventory would be depleted in 8.6 months.
The August New Home Sales was weaker-than-expected, but both Wall Street investors and Main Street economists are shrugging it off. The numbers were foreshadowed by weakening housing figures from earlier this summer.
- Building Permits dropped between March and June
- Housing Starts dropped between April and July
- Homebuilder confidence continues to sag
Together, these three data points suggest that the market for new homes will be soft through at least this month.
With New Home Sales fading and colder months ahead, it may be an opportune time for home buyers in Washington to look at new construction. Builders are eager to move inventory and the cost of materials remains low.
Buying “new” may never be cheaper — especially with mortgage rates as low as they are. The 0.750 percent drop in rates since January has shaved $188 off of a $200,000 mortgage’s monthly cost. That’s $2,250 per year in savings.
As home supplies dwindle and mortgage rates rise, finding “great deals” in new construction will undoubtedly get tougher. Take advantage of today’s market conditions, combined with builder pessimism. It may be the right combination at the right time to get that new home for cheap.
Monday, 27 September 2010
Sales of existing homes in recovered in August, perhaps the result of a post-tax credit normalization.
As compared to July, Existing Home Sales rose 8 percent in August, buoyed by falling interest rates and slow-to-rise home prices. There’s lot of “good deals” out there and home buyers in Pittsburgh are taking advantage.
The housing gains are relative, however. August’s total units sold barely crossed 4 million and still trails the average figures of the last few years by close to 1 million units.
Despite that, the August Existing Home Sales report can be considered a strong one. This is for several reasons:
- Sales volume increased in August without tax credit or government intervention
- Sales growth is not limited by geography. All 4 regions — Northeast, Southeast, Midwest, and West — showed improvement last month.
- Repeat buyers are driving the market, representing 48 percent of sales, up from forty-three percent in July.
And, perhaps most important to the housing market market, the number of available home resales dropped by almost one full month last month. At the current sales pace, the national inventory would be depleted in 11.6 months.
For home buyers, the data presents an interesting opportunity. With average mortgage rates rising from their best levels ever and home affordability cresting in places like Canonsburg , this autumn may represent the turn-around point for the housing market nationwide.
If you’re planning to move in early-2011, consider moving up your time frame.
Tuesday, 14 September 2010
Want a lower mortgage rate on your upcoming Pittsburgh home buy? Think about moving up the closing date.
The reason is rooted in “rate locks”, a bank’s guarantee to honor a specific mortgage rate for a specific, finite period of time. Rate locks allow home buyers to reserve mortgage rates today even though their respective closings may be scheduled as far as a year into the future.
A rate lock is a contract. No matter what the “current market rate” is at the time of closing, the bank will honor the terms of the original rate lock.
It would be like making an agreement to buy Microsoft stock at a specific price 60 days from now. No matter what the price, you already know what you’re paying for it.
In this sense, rate locks are predictions about the future and, meanwhile, as we all know, the future can be a challenge to forecast. Lenders know this, too, of course, so it’s easy to understand why longer rate locks tend to be more expensive than shorter ones.
The longer the rate lock, the more risk to the bank.
To compensate for this “time risk”, therefore, lenders typically step-up pricing for rate lock guarantees as lock period lengthen.
- 15-day rate lock : The best of all pricing
- 30-day rate lock : 1/8 percent extra cost versus the 15-day rate lock
- 45-day rate lock : 1/4 percent extra cost versus the 15-day rate lock
- 60-day rate lock : 3/8 percent extra cost versus the 15-day rate lock
One percent of “extra cost” is defined as one percent of the borrowed amount.
Now, this incremental price chart is just a rough guideline; exact spreads vary from lender-to-lender. Overall, however, it’s fairly close.
That’s why it’s important to manage your closing date vis-a-vis your mortgage rate. Closing in 30 days versus 31 can save you an eighth-percent in closing costs. Assuming a loan size of $200,000, that’s $2,500 saved.
So, when negotiating a closing date on a contract, keep in mind the math of mortgage rate locks. The shorter its length, the more money you might save.
Saturday, 17 April 2010
Located on almost 4 acres, this 3 bedroom, 2 bath house is extremely interesting and unique. The interior features an updated cherry kitchen with granite counters, updated baths with marble and ceramic & a heated floor, newer windows, furnace, air conditioning, and lots of special touches like mood lighting. There is an extra large family room/sun room addition with a loft area. Outside features a huge deck, pool, tiki bar and the most beautiful panoramic view!
Call today – save up to $16,000 - take advantage of the tax credit before it expires and the Customer Rewards Program.
Wednesday, 31 March 2010
This Is Not Your Typical Pittsburgh Split Entry
This carefully planned, custom built and well maintained property provides a winning combination of quiet, rural seclusion with easy access to major highways, schools, shopping, the airport and city life. This is NOT your typical Pittsburgh area split entry. From the wide steps to the guest closet at the entrance landing to the fantastic outdoor living space, you will find surprises at every turn.
The kitchen has been updated and features honey oak cabinets, granite countertops, a Chef's pantry with pull out storage, newer stainless steel/black appliances, ceramic tile floor, under cabinet lighting and a ceiling fan. The large living room and dining room provide room for any furniture arrangement.
The master bedroom includes two closets and opens to the deck and the main bath. There are two additional bedrooms with ceiling fans and ample closet space. The main bath is oversized and includes a claw foot jet tub, a separate shower, two vanity areas - one with seating, and a ceramic tile floor.
Downstairs, you will find a HUGE game room with a wood burner, laundry room, 2nd full bath and storage areas. There is a work shop area behind the 2 car integral garage. A one car detached garage with 2nd floor storage was recently added. There is parking and a paved driveway.
The oversized, well maintained deck can be accessed through the dining room or master bedroom. There is a hot tub, pergola, gazebo with canopy & a small pond with fountain. The property is bordered on one side with dwarf fruit trees. The back yard area is quiet, private and very usable. The owners enjoy watching deer and turkeys.
This home includes many custom features including: 6 panel wood doors, ceiling fans in most rooms, octagon windows, a window seat in the living room, hardwood floor in the dining room, tons of storage, a newer 50 gallon hot H2O tank, newly added seamless gutters and so much more. Make an appointment to visit 778 Nine Eighty Road today!
Tuesday, 16 March 2010
Peters Township $369,900
Amazingly different property! Custom built, top quality log home in excellent condition on 1.89 acres. Located on a private road in a wooded, quiet setting, directly off Rt. 19 near Potomac Furniture. Crazy, but true. Drive up the private road and you feel like you are in the mountains of North Carolina. This home features a sizzling hot tub & a gorgeous, sparkling blue in-ground pool. Relax, retreat in your own rustic paradise but don't worry - your drive to work, shopping, schools and all public conveniences won't take long. Just minutes from I 79 & South Hills Village Mall.
Two bedrooms now but the owners are converting a downstairs game room area into a lower level bedroom. With so many beautifully appointed custom interior features, you’ll definitely want an appointment to view this lovely and unique home.
Call me today or visit the open house on Sunday, March 21st from 1-3 p.m.
Monday, 25 January 2010
3 bedroom, 2.5 bath two story townhouse. This is an end unit in a great location in the Cranmoor plan in Peters Township. Enjoy the quiet, peaceful back patio with an incredible view of Canonsburg Lake. The unit needs updating but the rooms are spacious and bright. With the right owner and decorator, this townhouse could be a real show place. Priced to sell – buy it now and your upgrades will increase the value. Located near Rt. 19 at Donaldson’s Crossroads in McMurray, PA. Community pool and amenities are available. Listed at $153,900.