Homebuying Tip: Get Pre-Approved
In our continuing effort to help you be as informed and knowledgable as possible about the home buying process, we offer this important advice.
Get Pre-Approved.
Do you already know how much home you can afford? There is nothing more frustrating than spending a lot of time looking for a home, finding the perfect house, only to discover it is out of your price range.
Be sure to do your financial homework first. Assess your financial situation and then speak with a lender to learn about the different financing options available to you. When you find the right lender, get the paperwork processed so you'll be ready to make an offer when you find the right home.
Not only does being pre-approved give you more peace of mind when looking, it gives you a lot more negotiating power once you've found the home you want and are ready to make an offer.
If there is any area of the home buying process that you have a question about and would like for us to post a tip about it here, leave us a comment or question below and we'll cover that for you in a future post.
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Mortgage Defaults: Latest Woe for Housing
Just as the struggling real estate market seems to be stabilizing, a fresh problem is brewing far from real estate offices or home construction sites: a jump in defaults by higher-risk borrowers.
News of rising default rates by buyers with less than stellar credit could put a crimp in financing for home purchases - and prices. That's because the rapid growth of new types of mortgages was one of the key factors behind the boom that sent home buying, and prices, to record highs for five straight years through 2005.
Recently, some serious problems cropped up due to rising defaults. HSBC announced its bad debt charge last year would be about $1.8 billion higher than expected as problems grew in U.S. mortgage securities it had purchased, particularly loans to borrowers of less than top credit, a sector of the industry known as subprime mortgages.
Read the complete story here…
What is your opinion about the mortgage market? Leave us your comment below.
Housing Continues to Plunge
Housing construction plunged to the lowest level in nearly a decade last month as the housing industry continued to struggle with a severe slowdown.
Across the country, the median home price is now $219,000, down 2.7 percent from a year ago.
Construction of new homes and apartments plunged by 14.3 percent in January, pushing total activity down to a seasonally adjusted annual rate of 1.408 million units.
The weather was blamed for part of the setback. November and December had been unusually mild while more normal winter weather returned to much of the country in January, depressing building activity.
Home Improvements - Consumers Spending Less
The median price of new and existing homes dropped 10%, to $225,000, in the fourth quarter of 2006 over the same period a year before, according to the National Association of Home Builders. The value of remodeling has been shrinking, too: A homeowner who finished a basement — a $57,000 job on average nationally — got back 79% at resale in 2006. In 2005 the same job returned 90%, according to the 19th-annual Hanley-Wood's Cost Versus Value survey, published last fall.
Remodeling a bathroom with upscale products like stone countertops and a bidet cost $38,000 and returned 77% in 2006, down from 93% in 2005.
The diminishing returns have dampened spending on remodeling, which grew by 1.5%, to $168.7 billion, in the fourth quarter of 2006 over 2005, according to a report released in January by Harvard's Joint Center for Housing Studies. In 2004 and 2005, quarterly increases were as high as 20%.
Many homeowners are choosing to "postpone or pass on major home improvements," says Nicholas Retsinas, the director of the center, and that is likely to continue until the housing market picks up.
What about you? Thinking of a home improvement or remodeling project? Wonder if you'll re-coup the investment? Post your thoughts or comments here.
Homeowners - Beware of This Scam
You could be victimized by a scam where someone tries to lure you into applying for a loan secured by your home.
The Federal Reserve put out that warning recently in response to questions and complaints from people about direct-mail solicitation scams that describe a "Community Reinvestment Act Program" that entitles certain homeowners to cash grants or equity payments.
"Some of these solicitations may be read to indicate that the Federal Reserve endorses or supports the offers they contain," the Fed said.
"These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer's home."
In a prepared statement, "The Federal Reserve cautions the public about loan solicitations or other offers from lenders or mortgage brokers that offer consumer cash grants or equity disbursements as part of a 'CRA Program."
There is a 1977 federal law called the Community Reinvestment Act. But that law does not entitle people to grants or loans.
If there is any area of the home buying process that you have a question about and would like for us to post a tip about it here, leave us a comment or question below and we'll cover that for you in a future post.
