Rates WILL Rise a Good Reason to Buy Now?

This article is related so can be considered as a follow up to the last article “If You Don’t Buy a House Now, You’re Stupid or Broke. The answer to that question is… Well that it really depends on you and your debt to income ratios and ability to repay and previous repayment history of debt.

Lenders are subject to extreme scrutiny at the moment. Above average defaults can have drastic consequences and no lender is immune. This has led to over the top caution and excessive documentation and underwriting requirements.

It is what it is, so we’ll have to deal with it and only deal with mortgage reps on top of their game and don’t make promises they can’t keep!

FYI Rates continue to be at or near historic lows.

Given the eternal optimism that is inside all of us we believe the low rates are here to stay (or go lower yet) but think again.  The writing is on the wall for higher rates next year!  With the Fed buying approx 80% of all mortgage loans now, they will stop doing this by March, and there are few other buyers at current price and interest rates.

As the Federal Housing Administration (FHA) considers  raising the minimum credit score requirement for new borrowers to reduce risks to the single-family insurance fund, Fannie Mae (FNM: 1.04 +13.04%) has increased the minimum borrower credit score from 580 to 620.

Brian Faith, a Fannie Mae spokesperson confirmed the minimum hike, adding that the adjustment reflects a careful analysis of borrowers’ ability to repay their mortgage obligations over the life of the loan.

Faith said “Our experience with recently delivered loans with credit scores below 620 is that they reached a level of serious delinquency at a rate approximately nine times higher than other acquisitions during the same period.”

Fannie also reduced the allowable debt-to-income (DTI) ratio to 45% when executing loss mitigation efforts under the Home Affordable Modification Program (HAMP). Under HAMP, the US Treasury Department provides allocated capped incentives to servicers for the modification of loans on the verge of foreclosure.

Faith said that “high DTI ratio loans also have higher levels of serious delinquency. “In other words if you have a lot of debt and keep stacking it on with new cars, credit card bills and other investments and leveraged to the hilt, maybe you shouldn’t be buying a home until you pay down some of that debt first.

It’s not enough to help borrowers buy a home – we must also ensure that they can stay in the home over the long term. Repeat business through ill-gotten gains is rare, immoral and unethical, at least in my book.

Contact us today for a free consultation to see if home ownership may be in your future.

www.MarivicRealty.com
2056A Lincoln Highway
Edison, NJ 08817-3330
Office: 732-650-9911
Toll Free: 1-866-745-4622

Located Across from The Pines Manor & Crowne Plaza Hotel in the Nixon Plaza Shopping Center where the Labonbonniere Bake Shoppe

Click here for Door to Door Directions

If You Don't Buy a House Now, You're Stupid or Broke

Have you read this article yet? It was featured in Business Week. 

My first thought, wow! That’s blunt and kind of rude, a very harsh statement. But the writer, Mark Roth, uses this  head turning title to get your attention to make excellent points for those who are on the fence.  Namely that interest rates are at an all time low, in fact, the lowest in 40 years. He noted that in the late 70s, rates hit a high of 18%!

Can you ever imagine buying a house at 18%?  I  can't fathom the thought however not all too long ago in the grand scheme of life my parents did it, as probably yours depending on your age, as of this writing I’m 37.

Most of my friends and people buying homes in this generation either bought a home using an FHA loan in the 6%-9% range depending on how good or bad their credit was. Imagine having excellent credit and only being able to fetch a best rate of 17-18%, that’s just nuts, but possible to happen again in the not too distant future. 

In the 80s rates dropped from 12% to 9%, many people were thrilled, while most peoples reaction today today would be more like WHAT!!!! Well if you were previously at 17% or 18% you’d be dancing in the streets at the opportunity to refinance at those low by comparison rates. We’ve had it pretty good for so long now that most people can’t imagine rates so high these days.  

Generation X'ers probably would never dream of purchasing a home above 7% given all we’ve ever known are super low rates between 5% – 6%. Mr. Roth points out the history of previous interest rates as well as their impact on purchasing power. I happen to agree with his prediction that as the economy becomes more stable, interest rates WILL rise to hedge inflation as it wildly spins out of control thanks in part, a big part due to out of control government borrowing and spending. Heck even our country’s credit rating is in danger of losing its triple AAA credit rating.  I’ll make the prediction that by this time next year, rates will have risen at least 1%-2% higher than today.

Now let’s keep in mind if rates go up as expected, refinancing at a lower rate should not be counted on given the history and how long it may take in years for rates to even begin to fall without further government intervention.

These numbers are just examples but lets just say the average sale is $250,000. Assuming a 5% down payment at 5% interest on a 30 year fixed, your monthly principal and interest payment would be $1275.  If rates rise to 7%, your payment increases to $1580/month. 

Some buyers may be on the fence because they fear prices may drop further. Consider this. If there is a 10% decrease in price and the $250,000 falls to $225,000 in one year, but you wait to purchase and the interest rate rises to 7%, your payment will be $1422.  You spend more money per month plus at the higher interest rate, you pay more interest over the life of the loan.  Real estate appreciation is always a cycle and as the economy stabilizes, values will level out. 

Data being analyzing by many of the trend trackers are having the experts already saying this is happening in many markets and that this will occur by 2014 in many states. Making a home purchase is still a decision that should be weighed carefully, being a home owner is not for everyone. Some people with poor credit and personal financial habits or others with other reasons should probably remain renters. One important consideration will depend on how long you plan to stay in the home.  

Mark Roth summed up the article, "What I'm trying to impress upon everyone is that if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime." Depending on where you live I’d also have to add that you should also take into consideration funds from additional sources such as local government down payment and closing cost grants as well as the federal home buyer tax credit currently being offered while it lasts and not wait until last minute this time. The government will not be extending it again, this time they will actually have a phase out plan giving people plenty of opportunity to take advantage without just yanking the offer away.

Marivic GMAC Real Estate specializes in helping families make good decisions. We do NOT think you are stupid or broke if you don't buy a house right now.  But if you are considering purchasing a home and would like a FREE consultation, we'd love to sit down with you and help you weigh your options and direct you to a qualified, caring mortgage professional that will help you with the numbers.

www.MarivicRealty.com
2056A Lincoln Highway
Edison, NJ 08817-3330
Office: 732-650-9911
Toll Free: 1-866-745-4622

Located Across from The Pines Manor & Crowne Plaza Hotel in the Nixon Plaza Shopping Center where the Labonbonniere Bake Shoppe

Click here for Door to Door Directions

Tax Credit Boosts October Home Sales 10.1%

A last minute rush of home purchases by first time home buyers wanting to take advantage of the expiring federal housing tax credit was the cause of home sales far exceeded expectations last month, surging to the highest level in 2 1/2 years.

The National Association of Realtors said Monday that home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September.

The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. Now even existing home owners who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.

The Realtors report on October home sales reflect offers made before buyers knew the tax credit would be extended. "There was a lot of rush and hurry to complete sales" before the deadline.

Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline making this winter possibly the best time to begin shopping for a home. 

With a large inventory of homes for sale and limited time for sellers to sell with the threat of foreclosure hanging over their heads, there just may be some spectacular deals to be had and many options to choose from with little competition from other buyers.

The new deadline means that we're going to see some good activity coming out of the spring.

Sales, which were nearly 24 percent above last year's level, had been expected to rise to an annual pace of 5.65 million, according to economists surveyed by Thomson Reuters.

The median sales price was $173,100, down 7.1 percent from a year earlier and off 1.6 percent from September.

In addition to lower prices, mortgage rates have been hovering around 5 percent since the spring, largely because of government intervention. That has helped restore housing affordability in large swaths of the country.

The inventory of unsold homes on the market fell about 4 percent to 3.6 million. That's a 7 month supply at the current sales pace, and close to a healthy stock of about six months.

Over the summer, the housing market started to rebound from the worst downturn in decades, aided by aggressive federal intervention to lower mortgage rates and bring more buyers into the market.

But experts forecast that prices will fall again. Most say they will hit  a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market.

But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand.

"When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell."

A record-high 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September, the Mortgage Bankers Association said last week. The worst damage is still concentrated in the states hardest hit from the start: Florida, Nevada, California and Arizona. Together, they accounted for 43 percent of new foreclosures.

So what does this mean for New Jersey home buyers? It’s hard to say but not being at the top of the foreclosure list of states could possibly mean we’ve hit bottom or already very close, couple that with very low mortgage rates and buyers will need to decide if now just may be the optimal time to make a purchase or wait to see if prices drop a little more and risk higher interest rates in the spring.

The great news is New Jersey has several local state, county and federal finance assistance programs available that could add up to $20,000 in home purchase discounts in the form of government grants. (depending on your location, price, income etc. and of course the knowledge of these programs available by your realtor and mortgage representative.)

Whenever your ready, Marivic GMAC Real Estate will be here to keep you informed and let you decide, remember we’re here to help.

www.MarivicRealty.com
Local: 732-650-9911
Toll Free: 1-866-745-GMAC(4622)
Facebook Blog: www.realrep.com

This article is based on excerpts of a 11/23/09 story by ALAN ZIBEL
AP Real Estate Writer. Additional story contributions from Victor Kaminski Broker of Record of Marivic GMAC Real Estate.

Why NOW is a Good time to Buy?

Below is a neat little video explaining why it’s a good time to buy real estate now courtesy of Lennar Home Builders.

For any real estate questions and for all your real estate needs contact us any time.

Marivic GMAC Real Estate
www.MarivicRealty.com
Local: 732-650-9911
Toll Free: 1-866-745-GMAC(4622)
Facebook Blog: www.realrep.com

Has the real estate market finally hit bottom?

Is it too late for buyers to get the best deals?
Has the real estate market hit bottom?

Interest rates are at all time historical lows, home prices have bottomed out and now the amount of homes sold are showing signs of being on the rise again.

So did you miss your opportunity to buy at the best time? Probably not, the rates are still low and there are many homes still on the market available for sale and many deals still to be had.

I would not suggest waiting too much longer if you intend on buying, with eminent inflation on the horizon due to Obama's careless spending of money we don't have interest rates WILL RISE AGAIN but how high?

Care to find out?

Read about recent home sales on the rise:
http://www.realtor.org/RMODaily.nsf/pages/News2009032301?OpenDocument

About Us a Peek Inside Marivic GMAC Real Estate

I'd like to start off by welcoming all the visitors to my brokerage's blog, my name is Victor Kaminski and I'm the Broker of Record and owner of Marivic GMAC Real Estate, Marivic Referral Associates and Marivic School of Business.

The Marivic Companies were started by Victor Kaminski and Maritess Kaminski as a partnership in hopes of offering a better option to traditional real estate brokerages for agents, a little variety, something different when it comes to a real estate brokerage and culture that grows within. Each of us come from very different backgrounds which work well together, one as a technology geek with marketing and human behavior observation skills, the other as an up beat get the job done no nonsense attitude with a background as an educator.


We offer our agents more, a chance to learn more, earn more, develop skills you may never thought you even had and will teach you how to be successful in real estate as a career minded individual. We encourage when others discourage, we will show your how to become a better agent though hard work and will equip you with the tools needed to do the job.


We strive to fill our office only with the hardest working agents in the biz, young or old, black, white, asian, latino it doesn't matter. We are an equal opportunity employer and seek agents from diverse backgrounds to teach, share and collaborate with each other like no other office in the industry.


We encourage agents who work together to play together by offering outings and occasions to play as well as work in different environments as an opportunity to break away from the norm. Break away from the stress working as a real estate agent can bring.


From street fairs with our Mascot Selly, to watching Broadway Shows and Hockey Games, Playing Paintball together as a team, the kind of things that really make a team that works harder and plays harder then any other brokerage. Does this sound interesting to you?




We'll get into more of the details in other articles at a later time. I wouldn't want to overload you by regurgitated too many of my ideas all at once, besides the competition is listening. Shhhh......


Does this sound like a better work environment to you? We offer the tools to work smarter not just harder and offer the most training options. Our training topics are never fluff, always the best possible usable topics are covered. With all kinds of training available from from self paced videos by professional trainers to formal classroom and webex type training classes and round table brain storming and role play sessions, we have it all.

We recognize talent and encourage it to grow in you and with us. We offer opportunity, showing how hard work and effort can and will pay off. If you want to earn more, learn more, be presented with more opportunities then any other office offers and have the desire to truly look out for your client’s best interest, look no further than Marivic GMAC Real Estate and come grow with us.

Okay... Alright already....Enough already?


This blog will be filled with everything from content from our agency listings to articles I hope you will enjoy and find insightful covering topics like my quarks and takes on the real estate industry, rants and raves, best of and worst of and factors which effect it, external as well as from within.

Many folks find me to be a love him, hate him type of character with a few on neutral ground, its all in good fun and although sarcastic always with good intentions, this is all part of what makes up my unique personality.

I consider myself a pull no punches kind of guy, believe in honesty even if it hurts and that integrity, honor, dignity, ethics and morals are good things to have and are all traits which build character, Everyone should have some!

Most of the opinions found in this blog are strictly that, opinions of Victor Kaminski and may not reflect the opinions of everyone in my agency or industry. Although my views and outlook will be given, remember much of it is only my opinion even though facts are many times quoted or used, always do your own due diligence and check with your attorney and accountants for all legal and financial matters and how they can affect you. Nothing herein should constitute legal or financial advice.


Through my contributions and consumer as well as other professionals feedback in other blogs on the web, I have found how personalities and perspectives on the real estate market topic, trends and opinions differ vastly and at times it can be amusing while other times irritating, either way it is good to hear other people's opinions and views.

All this makes up the great democracy we live in here in the United States but keep in mind, this is MY BLOG and not a democracy so get with the program!

Please enjoy and leave with a little more knowledge, perspective or a few laughs, we'll try and keep the tears to a minimum.

It's a good thing to stay sharp and on your toes in this industry and this is just my stress reliever and perspective enhancer. Although this blog entry is geared more toward the professionals in the industry or wanting to break into it, I'd like to hear the opinions and input from you, the consumer as well in this blog, trust me when I say you'll always get mine!

Once again enjoy and please don't ever be offended, take it all in with a grain of salt and remember its all in good fun.