Home Price Data at Odds With Sales Stats
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About one in four homes currently on the market as of November 1st have experienced at least one price cut over the past 12 months. What’s more, the average discount for a reduced home is holding steady at 10% off of the original listing price. And luxury homes, those listed at $2 million and above, are seeing even steeper discounts with an average of 14% slashed from their original asking price.
Those numbers take some of the shine off the latest report from the National Association of Realtors, which touted an 11% increase in existing homes sales from the second quarter. The rise was in part attributed to the home buyer tax credit.
Some areas with high foreclosure rates — including Detroit, Las Vegas and Fresno, Calif. — are seeing a drop-off in the number of price reductions, but the sellers who have to cut their asking prices in these areas are doing so by significant amounts
Your typical seller is competing against too many other motivated sellers, many of whom are banks dumping distressed homes on the market, making the pricing environment is still really competitive.
And it might get worse for sellers yet.
The newly extended and expanded home buyer tax credit raises the income limits for eligible buyers and includes existing homeowners. This could spur a rise in inventory as qualifying homeowners who were planning to sell their home in the next one or two years decide to sell now to take advantage of the credit. Any increase in supply means sellers have to price their homes that much more competitively.
The best advice for any seller: Stay on top of your local market so you know where to price your home. If the house is initially placed on the market competitively compared to the homes in the area – the less likely a price drop will have to happen.
The Future of Fannie Mae and Freddie Mac
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With Fannie Mae and Freddie Mac at the center of the controversy surrounding the recent housing market downturn, many are wondering if the two companies will survive. Well there are some people in congress who are hoping to see them disappear. At a recent hearing a representative in the House Financial Services Committee spoke on the committees behalf. He said that the committee will suggest getting rid of Fannie and Freddie in order to replace them with a different system of home finance.
Others have said that if President Obama truly wants to put restrictions on banks he must also deal with some kind of reform involving Fannie Mae and Freddie Mac. It seems that there are enough people in congress clamoring for change involving the two companies that there will be change within them at the least.
Even though the two companies were on the brink of collapse as little as a year and a half ago, they have increased their share of the mortgage market. A majority of mortgages that have been made in that time from have been secured by Fannie and Freddie since the demand for mortgages without the guarantee is gone.
Many people believe that it is time to either turn these institutions into fully-backed government agencies or to have them go back to being private. The government is believed to have a plan to propose how these companies will emerge from their conservatorship. However, it is predicted that a major overhaul of these companies is far from happening considering the fragility of the economy.
For more information please contact Julie at 815-509-5427
Determining Credit Scores
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When looking to buy a home, many buyers are caught in a situation where they have no idea what their credit score is. Credit score is one of the most important factors in qualifying for a mortgage. It is also usually the sole factor in determining what rate the mortgage will be at. Finding what a buyers credit score is can be simple, but understanding how that score is determined is not.
One of the biggest factors in determining a credit score is if the borrower pays their debts on time. This factor can determine around 35% of the overall credit score. These debts include anything that would show up on a credit report. This includes credit cards, auto loans and mortgages. In order to make sure these debts are paid on time one should consider creating a calendar to keep track of due dates or simply setting up auto payments.
The amount that is actually owed to these various areas of debt is another large percentage of a credit score. How much is owed can determine up to 30% of a credit score. Balances on revolving debt shouldn’t exceed 30% of the total credit line. This rule results from the fact that a credit score is partially based on the ratio of credit used to credit available.
How long a consumer has been borrowing also determines a percentage of a credit score. This part of the credit score tends to favor older consumers than younger. It is determined simply by the length of time from when the first credit was issued up until the current date. One easy way to keep this time frame long is to keep the first credit card issued open forever.
One more influence on credit score is credit diversity. Credit diversity refers to having different types of credit that are used. This could mean having a car loan, a mortgage and a credit card. A wider range of different types of credit can help boost a score. However, they still need to be used and definitely need to be paid on time.
For more information please contact Julie at 815-509-5427
Reinvented Systems Help Homeowners Save
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Recently credit card interest rates and the minimum payments on the credit card balances have risen precipitously. This has but more stress on an already stressed consumer. Luckily, stores have begun to bring layaway programs back into the stores. These layaway programs came back this past holiday season.
Most layaway programs allow the customer to put an item on hold for a small fee. They also usually require a deposit of 10 to 20 percent of the total purchase price. This allows the customer to make payments over an agreed upon term. This term can be a few weeks or several months depending on which store the product is purchased at. Once the item is paid in full it can be brought home.
The layaway process allows consumers to avoid high credit card bills and outrageous interest rates. Layaway works very well for those who don’t have the savings to purchase needed items in full right away. Larger purchases like furniture and jewelry are a couple of examples of items that usually are too expensive for most consumers to purchase in full. Layaway also works well for those who don’t have credit available.
Many stores have reissued a layaway system. Sears, Kmart, Burlington Coat Factory, T.J. Maxx, Marshalls and Wal-Mart are just a few stores that offer some type of layaway. This allows them to sell to consumers who are worried about driving up credit card balances or depleting savings in such a troubled economy. In general, when purchasing expensive big ticket products, customers should find out if the store has a layaway system. This can save them large amounts of money in the long term.
For more information please contact Julie at 815-509-5427
First-Time Home Buyer Tax Credit Program – in a Nutshell
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If you’re planning to claim the tax credit, the first thing you’ll want to know is the new milestone dates.
- You must be under contract by April 30, 2010
- You must be closed by June 30, 2010
Again – It’s use it or lose it. But it isn’t just for first-time home buyers anymore.
Under the new rules, homeowners with at least 5 years in their current residence qualify for the tax credit, too. However, instead of the full $8,000 bonus afforded to first-timers, “move-up” buyers get capped at $6,500.
Most of the program’s qualification criteria remain as-is, with a few notable changes:
- You may not acquire the home from a mother, father, spouse, or child
- You may not acquire the home from an entity in which you’re a majority owner
- You may not acquire the home by gift or inheritance
- You must be 18 years of age or older
- The subject property’s purchase price may not exceed $800,000
- The subject property must be meant for use as a primary residence
- All parties to the purchase must be meet the eligibility requirements
If you qualify, claiming your tax credit is simple:
- Go under contract by April 30, 2010
- Close by June 30, 2010
- Submit IRS Form 5405 and your HUD-1 settlement with your tax returns
That’s it!
Remember that I am a loan officer and not an accountant. I can offer basic guidance, but paying a tax professional for expert advice is often the right way to go.
Benefits of Using GSF Mortgage Corporation
Completely Remodeled – You will not have to spend a dime in repair work and you can choose the color schemes of the carpet and paint!
Certified Contractors – Our work is completely guaranteed and we will repair any problems you find
Experienced Professionals – We have over 30 years of experience in the real estate industry
Establish Down Payment – The rent that you pay will be deposited into an escrow account, at the time of purchase those funds will be part of your down payment
Closing Costs Assistance – We have the ability to give you up to 6% in closing costs
Equity Position – We sell back all of our homes below market value so that you walk into equity
Clear Disclosures – All of the terms of your rent to own are up front, including monthly payments, and final purchase price
Credit Repair – Whether it is a small judgment or no credit we can help you improve your scores so that you are eligible for the end financing
Low Interest Rates – Because we are partners with a mortgage company we provide low fixed interest rates for your end loan
Free Moving Truck – Our company truck is available to you on your move in day
Move in today -We have houses available right now waiting to become your new HOME!
