Home staging is economical and a well-proven benefit to Realtors and home owners alike. Here are some basic staging principles every home seller can use.
Become a Seller, Not a Dweller
Homeowners must make the mental shift necessary to become Sellers, not Dwellers. It is only then sellers are able to realize they own a commodity to be sold and no longer their home. The way we live in our homes is different than the way we sell our homes. With this mental shift in place, the next step in the process may begin.
Clean and De-clutter
De-cluttering is the first principle used in home staging. Clutter is defined as those items in a room that are not necessary for its function or beauty. Clutter can be too many books, knickknacks, or accessories. With staging, only key accessories and furniture remain. The property will immediately appear more spacious and well cared for.
Here are some tips to keep in mind as it applies to de-cluttering:
1.A buyer wants to purchase a move-in ready home. A house that is not clean implies deferred maintenance.2.A buyer is purchasing square footage. Clear the clutter to create the impression of more space.3.Let the light in; buyers are drawn to open, airy spaces.
Appeal to the Masses
With the de-cluttering process accomplished, the next phase is depersonalizing. The buyer will want to mentally personalize it and imagine living in the house when it becomes theirs. This includes using neutral tones throughout as well as general updates which will appeal to the largest segment of potential buyers.
Realtors no longer have the almost impossible task of telling homeowners their faux finished pink bathroom really needs a neutral tone of paint (put in before and after of pink bathroom) or their beloved collection of gargoyles will turn off potential buyers.
If You Can't See It, You Can't Sell It.
Curb appeal is everything. It's the first impression a potential buyer gets of the home. Remember, if you can’t see it you can’t sell it. The easiest and best way to determine what needs to be done to the outside of the home and the lawn is to walk across the street. Look objectively at what the home looks like from that vantage point. Then, take the following curb appeal test:
1. Are the gutters clean and in good repair?
2. How does the driveway look?
3. Do the shrubs need pruning?
4. Do the trees need trimming?
5. How do the flower beds look?
6. Is the walkway leading to the house inviting?
7. Does the lawn look clean and neat?
8. Are the house numbers clearly visible?
9. Does the entryway and front door make a great first impression?
10. Are toys, tools, hoses and any other distracting items put away?
Amie Hebert Chaney, a Home Staging Expert (HSE), says Home Staging is the art of preparing a home for market to give the best possible first impression to potential buyers, resulting in a quicker sale and higher profit. The intent behind home staging is for potential buyers to be able to see the home as theirs.
It is only after answering and addressing the above curb appeal issues that the seller will have passed the “curb appeal test.”
Maximize Strong Points; Minimize Shortcomings
Finally, it’s important to show off the home’s best features, while hiding its flaws. Showcase focal points such as fireplaces, wood floors, and expansive views and divert attention away from less attractive features by creating alternate interest.
If a home seller is willing to follow these simple steps – clean and de-clutter, depersonalize, increase curb appeal and maximize the home’s strong points - they greatly improve the chances of selling their home quicker and for top dollar.
Showing posts with label talk to terry. Show all posts
Showing posts with label talk to terry. Show all posts
Monday, October 18, 2010
Wednesday, September 9, 2009
Behind FHA Strains, a Push to Lift Housing
Interesting article...and it definitely shows that the public's demand is there as in the case of California accounting for 13% of all FHA loans in July! California areas have FHA loans to $729K...people want to buy if we can find a way to get them money! Jumbo money needs to be more available!
Friday, August 28, 2009
Housing Lifts Recovery Hopes
Sales of existing homes in July jumped at the fastest rate in 10 years, sending stock prices up around the globe on hopes that the U.S. housing market -- a driver of the world's largest economy -- is stabilizing after years of decline.
Sales of single-family homes increased 7.2% in July from a month earlier to a seasonally adjusted annual rate of 5.24 million units, the National Association of Realtors said Friday.
The monthly increase was the largest since 1999, when the NAR began collecting data for all types of homes -- its measure includes condominiums and cooperative apartments. It marked the fourth monthly rise in a row. Sales also were up 5% from July 2008, showing the first gain from the year-earlier level since November 2005.
The good news on housing came as Federal Reserve Chairman Ben Bernanke issued a mostly optimistic report Friday on the state of the U.S. economy.
"Fears of financial collapse have receded substantially," Mr. Bernanke said at the Federal Reserve's annual retreat at Jackson Hole, Wyo. "After contracting sharply over the past year, economic activity appears to be leveling out, both in the U.S. and abroad, and the prospects for a return to growth in the next year appear good."
The housing report pushed the Dow Jones Industrial Average up 155.91 points, or 1.7%, to close at 9505.96. The Dow has risen five of the past six weeks.
The increase in home sales came as buyers rushed to lock in bargains on foreclosed homes and tap a federal tax credit for first-time buyers that is set to expire in a few months. Yet home sales remain nearly 20% below the pace of 2006, when the housing boom was peaking. Housing economists and even some real-estate agents caution that the recovery is fragile.Related
* Economists React: 'A Long Way to Go'
* Housing: A 'Wave' of Foreclosure Listings?
* Souring Loans Compound Mortgage Woes
For now, low prices and attractive financing are enticing buyers. Jodi Janiga, 32 years old, is using a loan insured by the Federal Housing Administration to buy a two-bedroom townhouse in Green Valley, a Las Vegas planned neighborhood with golf courses and sidewalk statues. That required her to put about $4,200 down on the $119,000 property. Three years ago, similar townhomes in the area sold for $280,000.
"It was a smoking deal," said Ms. Janiga, a schoolteacher who says she bid on nearly 15 homes.
"The buyers are back, and they're buying," but mainly the lowest-priced homes, said Teresa Boardman, a real-estate broker in St. Paul, Minn. Many potential sellers of higher-quality homes are waiting to put them on the market if prices start to rebound, she said.
The economic outlook is crucial for housing demand, as many potential buyers will hold off as long as they fear job losses.
Most economists say the U.S. economy, which began contracting in December 2007 in what is the deepest and longest recession since World War II, has started growing again. The Fed said manufacturing output rose 1% in July, the strongest increase since December 2006. U.S. exports rose in May and June. Consumers are still dragging on the economy, though, as a high jobless rate, stagnant wages, tight credit and a renewed eagerness to save have restrained spending.
The Realtors said a survey of agents showed that foreclosure-related sales accounted for 31% of July transactions. But foreclosures are a much bigger factor in some markets, particularly in parts of Florida, Nevada, Arizona and California. In the Las Vegas area in July, bank-owned properties accounted for 73% of all sales, according to the Greater Las Vegas Association of Realtors.
Distressed sales continue to push down prices. The median U.S. price in July was $178,400, down 15% from a year earlier.
Sales were also strong in some metro areas that haven't been hit hard by foreclosures, said Tom Lawler, a housing economist in Leesburg, Va. These include Des Moines, Iowa; San Antonio and Roanoke, Va. "I think people who decided to check into the [home-shopping] process were pleasantly surprised by prices and mortgage-credit availability," Mr. Lawler said. The FHA is insuring mortgages for people with down payments of as low as 3.5%.
Housing also has grown more affordable.
On average, a U.S. household with a median income in the second quarter of this year could afford a home costing 71% more than the median price, according to Moody's Economy.com. Three years ago, such a household could have afforded a home only 5% over the median.
Compared with a year earlier, unit sales in July were up 3.3% in the Northeast, 8% in the Midwest, 5.4% in the South and 1.8% in the West, the NAR said.
Sales have been aided by a federal tax credit of as much as $8,000 for first-time home buyers. That stimulus will end Nov. 30 unless Congress extends it.[Housing Recovery Lifts Hopes]
Sens. Christopher Dodd, a Connecticut Democrat, and Johnny Isakson, a Republican from Georgia, have introduced legislation to extend the credit, increase it to as much as $15,000 and make it available to all home buyers, not just first-timers. Senate Majority Leader Harry Reid backs an extension of the credit.
"Congress is not going to endanger the fragile beginnings of a housing recovery by letting the credit lapse," said Howard Glaser, a mortgage-industry consultant in Washington.
Inventories of unsold homes are falling but remain high. And many potential sellers are staying out of the market, waiting for signs of rising prices before trying to sell. That could lead to a bulge in inventory later.
Some 1.8 million homeowners are currently in foreclosure, and the number of future foreclosures could top one million, says Torsten Slok, senior economist at Deutsche Bank. "It's safe to say that we still have a significant amount of foreclosures ahead of us," he said, adding: "It's still not a healthy housing market when you have one third of sales coming from foreclosure sales."—Sara Murray and Corey Boles contributed to this article.
By JAMES R. HAGERTY and NICK TIMIRAOS of the WSJ
Sales of single-family homes increased 7.2% in July from a month earlier to a seasonally adjusted annual rate of 5.24 million units, the National Association of Realtors said Friday.
The monthly increase was the largest since 1999, when the NAR began collecting data for all types of homes -- its measure includes condominiums and cooperative apartments. It marked the fourth monthly rise in a row. Sales also were up 5% from July 2008, showing the first gain from the year-earlier level since November 2005.
The good news on housing came as Federal Reserve Chairman Ben Bernanke issued a mostly optimistic report Friday on the state of the U.S. economy.
"Fears of financial collapse have receded substantially," Mr. Bernanke said at the Federal Reserve's annual retreat at Jackson Hole, Wyo. "After contracting sharply over the past year, economic activity appears to be leveling out, both in the U.S. and abroad, and the prospects for a return to growth in the next year appear good."
The housing report pushed the Dow Jones Industrial Average up 155.91 points, or 1.7%, to close at 9505.96. The Dow has risen five of the past six weeks.
The increase in home sales came as buyers rushed to lock in bargains on foreclosed homes and tap a federal tax credit for first-time buyers that is set to expire in a few months. Yet home sales remain nearly 20% below the pace of 2006, when the housing boom was peaking. Housing economists and even some real-estate agents caution that the recovery is fragile.Related
* Economists React: 'A Long Way to Go'
* Housing: A 'Wave' of Foreclosure Listings?
* Souring Loans Compound Mortgage Woes
For now, low prices and attractive financing are enticing buyers. Jodi Janiga, 32 years old, is using a loan insured by the Federal Housing Administration to buy a two-bedroom townhouse in Green Valley, a Las Vegas planned neighborhood with golf courses and sidewalk statues. That required her to put about $4,200 down on the $119,000 property. Three years ago, similar townhomes in the area sold for $280,000.
"It was a smoking deal," said Ms. Janiga, a schoolteacher who says she bid on nearly 15 homes.
"The buyers are back, and they're buying," but mainly the lowest-priced homes, said Teresa Boardman, a real-estate broker in St. Paul, Minn. Many potential sellers of higher-quality homes are waiting to put them on the market if prices start to rebound, she said.
The economic outlook is crucial for housing demand, as many potential buyers will hold off as long as they fear job losses.
Most economists say the U.S. economy, which began contracting in December 2007 in what is the deepest and longest recession since World War II, has started growing again. The Fed said manufacturing output rose 1% in July, the strongest increase since December 2006. U.S. exports rose in May and June. Consumers are still dragging on the economy, though, as a high jobless rate, stagnant wages, tight credit and a renewed eagerness to save have restrained spending.
The Realtors said a survey of agents showed that foreclosure-related sales accounted for 31% of July transactions. But foreclosures are a much bigger factor in some markets, particularly in parts of Florida, Nevada, Arizona and California. In the Las Vegas area in July, bank-owned properties accounted for 73% of all sales, according to the Greater Las Vegas Association of Realtors.
Distressed sales continue to push down prices. The median U.S. price in July was $178,400, down 15% from a year earlier.
Sales were also strong in some metro areas that haven't been hit hard by foreclosures, said Tom Lawler, a housing economist in Leesburg, Va. These include Des Moines, Iowa; San Antonio and Roanoke, Va. "I think people who decided to check into the [home-shopping] process were pleasantly surprised by prices and mortgage-credit availability," Mr. Lawler said. The FHA is insuring mortgages for people with down payments of as low as 3.5%.
Housing also has grown more affordable.
On average, a U.S. household with a median income in the second quarter of this year could afford a home costing 71% more than the median price, according to Moody's Economy.com. Three years ago, such a household could have afforded a home only 5% over the median.
Compared with a year earlier, unit sales in July were up 3.3% in the Northeast, 8% in the Midwest, 5.4% in the South and 1.8% in the West, the NAR said.
Sales have been aided by a federal tax credit of as much as $8,000 for first-time home buyers. That stimulus will end Nov. 30 unless Congress extends it.[Housing Recovery Lifts Hopes]
Sens. Christopher Dodd, a Connecticut Democrat, and Johnny Isakson, a Republican from Georgia, have introduced legislation to extend the credit, increase it to as much as $15,000 and make it available to all home buyers, not just first-timers. Senate Majority Leader Harry Reid backs an extension of the credit.
"Congress is not going to endanger the fragile beginnings of a housing recovery by letting the credit lapse," said Howard Glaser, a mortgage-industry consultant in Washington.
Inventories of unsold homes are falling but remain high. And many potential sellers are staying out of the market, waiting for signs of rising prices before trying to sell. That could lead to a bulge in inventory later.
Some 1.8 million homeowners are currently in foreclosure, and the number of future foreclosures could top one million, says Torsten Slok, senior economist at Deutsche Bank. "It's safe to say that we still have a significant amount of foreclosures ahead of us," he said, adding: "It's still not a healthy housing market when you have one third of sales coming from foreclosure sales."—Sara Murray and Corey Boles contributed to this article.
By JAMES R. HAGERTY and NICK TIMIRAOS of the WSJ
Friday, July 3, 2009
Jumbo Loans = Jumbo Problem!
I believe we all like some of the signs coming in today for Real Estate…at least in the overall number of contracts being written. It does appear that demand is beginning to come around with the discounts offered from many of the REO properties, and short sale scenarios. Couple this with the tax credit, and other incentives towards First Time Homebuyers, and the numbers can be falsely positive.
There is a big…let me re-phrase that: There is a JUMBO Problem that is beginning to scream loudly…and needs attention.
To make sure we are all with a crystal clear understanding, a Jumbo Loan is a single mortgage that is higher than $417k.
Do you know what is required to obtain most Jumbo Loans?
1. 20 to 25% Down Payment (some areas may be higher)
2. A 720 credit score or higher
Most areas have seen an increase in demand of homes that are priced below $450k, and the homes that are above $450k have typically dropped in demand significantly.
There are several reasons for the reduction in the volume of sales for this range, but the primary reason is the difficulty of obtaining financing for a Jumbo Loan. If this situation does not find some relief to have lenders be able to get back to a “healthy” (not sub-prime, and not exotic type loans, but good sensible lending) lending practice for this price range, we will soon be faced with a deeper hole that will perpetuate our existing problems with foreclosures.
What would be considered healthy?
I have talked to several people in the lending industry and the general range would be 10% down payment, and a minimum of 650 on the credit score…with full documentation to prove the relevant facts.
We need the banks to help themselves first.
Until they can attract more buyers to the Jumbo type of loan, the foreclosures in this range will begin to become a significant problem, and pricing could see a significant problem in this range.
So, hopefully lenders can see this and figure out how to assist in increasing the demand in lieu of exaserbating something that will keep supply increasing, and demand decreasing…it is a catch 22 for the lenders, but the risk of doing nothing is greater than trying something.
There is a big…let me re-phrase that: There is a JUMBO Problem that is beginning to scream loudly…and needs attention.
To make sure we are all with a crystal clear understanding, a Jumbo Loan is a single mortgage that is higher than $417k.
Do you know what is required to obtain most Jumbo Loans?
1. 20 to 25% Down Payment (some areas may be higher)
2. A 720 credit score or higher
Most areas have seen an increase in demand of homes that are priced below $450k, and the homes that are above $450k have typically dropped in demand significantly.
There are several reasons for the reduction in the volume of sales for this range, but the primary reason is the difficulty of obtaining financing for a Jumbo Loan. If this situation does not find some relief to have lenders be able to get back to a “healthy” (not sub-prime, and not exotic type loans, but good sensible lending) lending practice for this price range, we will soon be faced with a deeper hole that will perpetuate our existing problems with foreclosures.
What would be considered healthy?
I have talked to several people in the lending industry and the general range would be 10% down payment, and a minimum of 650 on the credit score…with full documentation to prove the relevant facts.
We need the banks to help themselves first.
Until they can attract more buyers to the Jumbo type of loan, the foreclosures in this range will begin to become a significant problem, and pricing could see a significant problem in this range.
So, hopefully lenders can see this and figure out how to assist in increasing the demand in lieu of exaserbating something that will keep supply increasing, and demand decreasing…it is a catch 22 for the lenders, but the risk of doing nothing is greater than trying something.
Tuesday, June 30, 2009
Atlanta North Update - Bottom on the way? Talk to Terry June Edition now available!
Demand is rising, and Supply is shrinking! Lending practices and Jumbo Loans will hold the key.
Visit www.TalktoTerry.com to watch the quick video.
Visit www.TalktoTerry.com to watch the quick video.
Thursday, June 18, 2009
A Full Day at the Housing Summit
Yesterday was a solid day of learning for me…
I began by going to the Housing Summit, and then went to the Broker’s Council for NAMAR…it was a FULL day!
What I learned is the following:
1. We are right on target with what we have been communicating…Pending sales are rising back to levels of last year, and Supply is coming down everywhere. This is where you would see solid glimmers of hope forming the POTENTIAL for a bottom…everything in markets are driven by supply and demand…
2. Be glad you are not in Clayton County! The median home sales price was like $40k!
3. Forsyth is one of the areas that has been fairing better than most on values of homes, BUT my contention is that is the only county that has still been sliding on volume of contracts…meaning, it needs to come down some more to stimulate more buyers to buy…
4. What will shape the bottom, or not are the following:
a. Interest Rates need to remain low
b. Lending Practices – we need to get back to normal lending practices and allow the “good” credit people to be able to buy homes vs the tight restrictions everyone is facing today
c. Jumbo Money – if the Jumbo Loans are not made more readily available, then the upper end homes will see a very difficult time in selling to someone today…right now, you must have 20% down, and a 720 credit score…this eliminates a lot of people from the potential of buying…
d. GAS Prices! If the gas goes up to $4.00 a gallon, then we could see a terrible time for us all…in many ways…
5. As Banks are being riddled with mass lot take-backs/foreclosures, you will begin to see incredibly priced NEW homes begin to surface in areas…they will be a brand new home that will be priced to compete with a foreclosure…this is brewing, and will begin to be shown in the upcoming months…banks are beginning to get aggressive in pricing or building out of a situation…what will be good, is that it will stimulate people to buy, and that is a necessary thing to get out of the bottom and move into correction…GET YOUR SELLERS ON BOARD WITH THIS AS IT WILL ONLY GET MORE DIFFICULT TO SELL ONCE THIS COMES TO BE!!!!!
6. Most areas have shrunk in inventory, so RE-SALES will have a good ending to the year if they get priced right, and get priced to sell!
7. Gwinnett County is in the process of beginning its “rebuilding” of areas…it is the Gwinnett County Neighborhood Stabilization Program…they have targeted areas that they will be able to buy vacant, and run down homes to rehab and help the overall market conditions.
8. Social Networking is here to stay…if you are not on board with it, you better get on board!
Keep up the great work, and remember this:
You have finished swimming 75% of a huge body of water…it has been a long hard swim…you can either give up, or finish the final 25%...I CHOOSE TO FINISH STRONG!
I began by going to the Housing Summit, and then went to the Broker’s Council for NAMAR…it was a FULL day!
What I learned is the following:
1. We are right on target with what we have been communicating…Pending sales are rising back to levels of last year, and Supply is coming down everywhere. This is where you would see solid glimmers of hope forming the POTENTIAL for a bottom…everything in markets are driven by supply and demand…
2. Be glad you are not in Clayton County! The median home sales price was like $40k!
3. Forsyth is one of the areas that has been fairing better than most on values of homes, BUT my contention is that is the only county that has still been sliding on volume of contracts…meaning, it needs to come down some more to stimulate more buyers to buy…
4. What will shape the bottom, or not are the following:
a. Interest Rates need to remain low
b. Lending Practices – we need to get back to normal lending practices and allow the “good” credit people to be able to buy homes vs the tight restrictions everyone is facing today
c. Jumbo Money – if the Jumbo Loans are not made more readily available, then the upper end homes will see a very difficult time in selling to someone today…right now, you must have 20% down, and a 720 credit score…this eliminates a lot of people from the potential of buying…
d. GAS Prices! If the gas goes up to $4.00 a gallon, then we could see a terrible time for us all…in many ways…
5. As Banks are being riddled with mass lot take-backs/foreclosures, you will begin to see incredibly priced NEW homes begin to surface in areas…they will be a brand new home that will be priced to compete with a foreclosure…this is brewing, and will begin to be shown in the upcoming months…banks are beginning to get aggressive in pricing or building out of a situation…what will be good, is that it will stimulate people to buy, and that is a necessary thing to get out of the bottom and move into correction…GET YOUR SELLERS ON BOARD WITH THIS AS IT WILL ONLY GET MORE DIFFICULT TO SELL ONCE THIS COMES TO BE!!!!!
6. Most areas have shrunk in inventory, so RE-SALES will have a good ending to the year if they get priced right, and get priced to sell!
7. Gwinnett County is in the process of beginning its “rebuilding” of areas…it is the Gwinnett County Neighborhood Stabilization Program…they have targeted areas that they will be able to buy vacant, and run down homes to rehab and help the overall market conditions.
8. Social Networking is here to stay…if you are not on board with it, you better get on board!
Keep up the great work, and remember this:
You have finished swimming 75% of a huge body of water…it has been a long hard swim…you can either give up, or finish the final 25%...I CHOOSE TO FINISH STRONG!
Monday, June 1, 2009
'Jumbo' Loans, Down-to-Earth Rates
Looking for a mortgage that exceeds $729,750?
Not long ago, you would have been charged about 8 percent interest on a loan that large -- if you could find a lender willing to grant you one.
Now, rates on these "jumbo" loans are much more affordable, having settled in the low 6 percent range, on average, for the past few weeks. But taking advantage of the lower rates remains tough. "Availability is still an issue, and the bar is higher in terms of down-payment requirements and credit scores," said Greg McBride, a senior financial analyst at Bankrate.com, a personal finance Web site.
After the mortgage market began unraveling in late 2007, rattled investors stopped buying jumbos. Instead, they turned to loans that met the requirements of mortgage financers Fannie Mae and Freddie Mac. At the time, the two companies did not buy loans that exceeded $417,000. Rates on loans larger than that shot up. And borrowers in pricey areas like Washington got shut out of the housing market or lost a chance to refinance.
To help lower borrowing costs, the federal government temporarily raised the limit for loans Fannie Mae and Freddie Mac could buy. Now the ceiling is $729,750 on single-family homes in some of the nation's most expensive counties, including many in the Washington region. The higher ceiling, due to expire Dec. 31, also applies to mortgages backed by the Federal Housing Administration.
To check the limits in your area, go to the Department of Housing and Urban Development Web page http://https://entp.hud.gov/idapp/html/hicostlook.cfm.
In areas where the $729,750 ceiling applies, there is now a three-tiered mortgage market. It is structured so that the size of the loan is a main factor in determining its rate.
On a 30-year, fixed-rate loan up to $417,000, the average rate this week was 5.44 percent, according to the research firm HSH Associates. The next best rates apply to loans from $417,000 to $729,750, which averaged 5.72 percent this week. Loans larger than that get hit with the highest rates, which averaged 6.37 percent for the week.
To avoid the highest rates, some borrowers are trying to stay beneath the $729,750 ceiling by taking out two loans while still making a down payment: one loan for $729,750 and another for the balance, said Kerry White, a loan officer at Prosperity Mortgage, a joint venture of Long & Foster and Wells Fargo.
These "piggyback" mortgages are difficult to arrange. But for those who can get them, they are generally a cheaper alternative than taking out a single jumbo loan because they do not expose borrowers to the same stringent credit-score, down-payment and savings requirements, White said. At Wells Fargo, for instance, a borrower willing to make a 20 percent down payment on a jumbo loan must also prove that he or she has enough savings to cover at least 40 percent of the loan amount, not including whatever is stashed away in retirement accounts, White said.
But getting a second loan is not as easy as it once was. In the past, when home prices were climbing, piggybacks enabled borrowers to avoid down payments by using two loans to cover the entire cost of a home. Many of these loans went bad when the housing market soured. Most lenders now demand a down payment and shy away from making second loans.
White managed to help a Washington area lawyer secure a second mortgage recently to help pay for a $2.5 million house. "But he got it only because he was putting 30 percent down," she said. "The small bank that made the second loan was comfortable with that."
These standards are not out of line with current norms, said Bob Walters, chief economist at the online mortgage firm Quicken Loans.
"Borrowers are going to be putting down 20 percent at the very least on a jumbo, and once [the loan amount] gets past $1.5 million, the down-payment requirements go to 30 percent and even 40 percent," Walters said. "The more you're borrowing, the more skin in the game you have to have."
The National Association of Realtors said these requirements have stalled the sales of high-priced homes and hampered the housing market's recovery. The supply of expensive homes is growing, adding to an already bloated housing market, the group said.
Meanwhile, the default rates among jumbo borrowers have been rising because those homeowners lack refinancing opportunities, the association said.
Against that backdrop, Bank of America sees opportunity.
In January, the company started offering jumbos with rates in the high 5 percent range for borrowers who pay one point, a fee equal to 1 percent of the loan that helps lower the rate charged. Borrowers who take out jumbos that are fixed for five years and then adjust every year thereafter are priced in the low 5 percent range. Those jumbo loans are limited to $1.5 million, and Bank of America plans to raise the amount to $2 million in the next few weeks.
"All of us have heard the same complaint: Jumbo buyers with good incomes and strong credit deserve better rates," Vijay Lala, a mortgage-product executive for the bank, said at a recent National Association of Realtors conference.
But anyone who takes out a loan for more than $1 million must have enough cash in reserve to cover at least a year's worth of principal and interest payments, Lala said. Borrowers must also show proof of income and assets to qualify.
Consumers who can meet these criteria have performed well historically, which is why Bank of America is willing to take a chance on them, Lala said.
Bank of America and most lenders that offer jumbos these days are holding on to them instead of selling them to investors, as they did about two years ago. That's because few investors are willing to buy them, said Keith Gumbinger, a vice president at the research firm HSH.
By keeping these loans in their own portfolios, lenders have discretion on what standards they want to impose on borrowers, so it pays to shop around, Gumbinger said. "Lenders can have very different ideas for what they find to be acceptable."
Don't limit your search to big banks, either, said Guy Cecala, publisher of Inside Mortgage Finance. Take a look at community banks.
"Generally, they would like to make a loan locally to someone they know," Cecala said. "You should milk any banking relationships you've got. People who keep their life savings at a community bank have more leverage than somebody walking off the street."
Article Courtesy of WashingtonPost.com, By Dina ElBoghdady
Not long ago, you would have been charged about 8 percent interest on a loan that large -- if you could find a lender willing to grant you one.
Now, rates on these "jumbo" loans are much more affordable, having settled in the low 6 percent range, on average, for the past few weeks. But taking advantage of the lower rates remains tough. "Availability is still an issue, and the bar is higher in terms of down-payment requirements and credit scores," said Greg McBride, a senior financial analyst at Bankrate.com, a personal finance Web site.
After the mortgage market began unraveling in late 2007, rattled investors stopped buying jumbos. Instead, they turned to loans that met the requirements of mortgage financers Fannie Mae and Freddie Mac. At the time, the two companies did not buy loans that exceeded $417,000. Rates on loans larger than that shot up. And borrowers in pricey areas like Washington got shut out of the housing market or lost a chance to refinance.
To help lower borrowing costs, the federal government temporarily raised the limit for loans Fannie Mae and Freddie Mac could buy. Now the ceiling is $729,750 on single-family homes in some of the nation's most expensive counties, including many in the Washington region. The higher ceiling, due to expire Dec. 31, also applies to mortgages backed by the Federal Housing Administration.
To check the limits in your area, go to the Department of Housing and Urban Development Web page http://https://entp.hud.gov/idapp/html/hicostlook.cfm.
In areas where the $729,750 ceiling applies, there is now a three-tiered mortgage market. It is structured so that the size of the loan is a main factor in determining its rate.
On a 30-year, fixed-rate loan up to $417,000, the average rate this week was 5.44 percent, according to the research firm HSH Associates. The next best rates apply to loans from $417,000 to $729,750, which averaged 5.72 percent this week. Loans larger than that get hit with the highest rates, which averaged 6.37 percent for the week.
To avoid the highest rates, some borrowers are trying to stay beneath the $729,750 ceiling by taking out two loans while still making a down payment: one loan for $729,750 and another for the balance, said Kerry White, a loan officer at Prosperity Mortgage, a joint venture of Long & Foster and Wells Fargo.
These "piggyback" mortgages are difficult to arrange. But for those who can get them, they are generally a cheaper alternative than taking out a single jumbo loan because they do not expose borrowers to the same stringent credit-score, down-payment and savings requirements, White said. At Wells Fargo, for instance, a borrower willing to make a 20 percent down payment on a jumbo loan must also prove that he or she has enough savings to cover at least 40 percent of the loan amount, not including whatever is stashed away in retirement accounts, White said.
But getting a second loan is not as easy as it once was. In the past, when home prices were climbing, piggybacks enabled borrowers to avoid down payments by using two loans to cover the entire cost of a home. Many of these loans went bad when the housing market soured. Most lenders now demand a down payment and shy away from making second loans.
White managed to help a Washington area lawyer secure a second mortgage recently to help pay for a $2.5 million house. "But he got it only because he was putting 30 percent down," she said. "The small bank that made the second loan was comfortable with that."
These standards are not out of line with current norms, said Bob Walters, chief economist at the online mortgage firm Quicken Loans.
"Borrowers are going to be putting down 20 percent at the very least on a jumbo, and once [the loan amount] gets past $1.5 million, the down-payment requirements go to 30 percent and even 40 percent," Walters said. "The more you're borrowing, the more skin in the game you have to have."
The National Association of Realtors said these requirements have stalled the sales of high-priced homes and hampered the housing market's recovery. The supply of expensive homes is growing, adding to an already bloated housing market, the group said.
Meanwhile, the default rates among jumbo borrowers have been rising because those homeowners lack refinancing opportunities, the association said.
Against that backdrop, Bank of America sees opportunity.
In January, the company started offering jumbos with rates in the high 5 percent range for borrowers who pay one point, a fee equal to 1 percent of the loan that helps lower the rate charged. Borrowers who take out jumbos that are fixed for five years and then adjust every year thereafter are priced in the low 5 percent range. Those jumbo loans are limited to $1.5 million, and Bank of America plans to raise the amount to $2 million in the next few weeks.
"All of us have heard the same complaint: Jumbo buyers with good incomes and strong credit deserve better rates," Vijay Lala, a mortgage-product executive for the bank, said at a recent National Association of Realtors conference.
But anyone who takes out a loan for more than $1 million must have enough cash in reserve to cover at least a year's worth of principal and interest payments, Lala said. Borrowers must also show proof of income and assets to qualify.
Consumers who can meet these criteria have performed well historically, which is why Bank of America is willing to take a chance on them, Lala said.
Bank of America and most lenders that offer jumbos these days are holding on to them instead of selling them to investors, as they did about two years ago. That's because few investors are willing to buy them, said Keith Gumbinger, a vice president at the research firm HSH.
By keeping these loans in their own portfolios, lenders have discretion on what standards they want to impose on borrowers, so it pays to shop around, Gumbinger said. "Lenders can have very different ideas for what they find to be acceptable."
Don't limit your search to big banks, either, said Guy Cecala, publisher of Inside Mortgage Finance. Take a look at community banks.
"Generally, they would like to make a loan locally to someone they know," Cecala said. "You should milk any banking relationships you've got. People who keep their life savings at a community bank have more leverage than somebody walking off the street."
Article Courtesy of WashingtonPost.com, By Dina ElBoghdady
Wednesday, May 20, 2009
Atlanta Market Re-Setting
Atlanta (North) Trends for May...You may be surprised as to the value of a 4 bdrm, 2.5 bath home over the last 2 years and what it has re-set to! As the market re-sets, what are you doing to understand how it is shifting?
Check out this months Talk to Terry here!
Check out this months Talk to Terry here!
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