FHA Loan Apps Rise as Borrowers Try to Beat Fee Hikes

FHA Loan Apps Rise as Borrowers Try to Beat Fee Hikes

Mortgage applications for Federal Housing Administration loans soared 11 percent from the previous week as borrowers try to rush their applications in to beat the higher FHA costs that will start rolling out on Monday, according to the U.S. Mortgage Market Index report released from Mortech Inc. and Mortgage Daily.

Starting April 1, the FHA will be increasing its annual mortgage insurance premiums on all FHA loans. The annual premium is paid with the monthly mortgage payment. The FHA also will be increasing the FHA mortgage insurance premium that is paid up front during closing, also starting April 1.

Borrowers who are trying to avoid the higher fees are trying to get their FHA mortgage applications approved before the changes take effect. The new fees also will apply to home owners who refinance their mortgages.

FHA loans have soared in popularity in recent years since they allow for smaller down payments, as low as 3.5 percent compared to traditional loans, and often carry less stringent credit requirements.

Source: “Mortgage Applications for FHA Loans Increase Ahead of Higher Fees,” Realty Times

How Involved Should Sellers be in a Real Estate Sale?

How Involved Should Sellers be in a Sale?

With competition high, sellers may be intervening more when it comes to selling their home, and it can cause personalities to clash.

Because it might take a little longer to find a buyer nowadays, some sellers are getting very “hands on,” proofreading every line carefully on the MLS and brochures, and questioning your every step, according to a recent article at The Philadelphia Inquirer.

“Sellers get particularly ‘brainy’ in terms of the value of their home, but the reality is that they may not be aware of all recent comparable sales, or been inside those comparables, to really pinpoint value,” Mark Wade, a Philadelphia real estate sales associate, told The Philadelphia Inquirer.

Real estate professionals say it’s important for agents to keep their seller-clients informed every step along the way and educate them about the market.

“Our job as their agents is to advise and to educate them as to the present climate and conditions,” says Marilou Buffum, a Philadelphia agent. “We cannot make decisions for our clients. We only advise and represent.”

The Internet has provided abundant housing information to sellers so they may have access to a lot, but it require some explanation.

“We are dealing with more informed involvement on the part of both the buyers and sellers, it still requires the REALTORS® to analyze all the data and summarize it in a way that provides useful information that can be utilized,” Paul Leiser, a real estate professional from the New Jersey shore, told The Philadelphia Inquirer.

Source: “The Seller’s Role: How Big Is Their Part?” RISMedia (March 24, 2012)

Single-Family Real Estate Investment: It’s Time To Get Back In!

Single-Family Real Estate Investment: It’s Time To Get Back In

“…if I had a way of buying a couple hundred thousand single-family homes…I would load up on them and…take mortgages out at very, very low rates…it’s a leveraged way of owning a very cheap asset now and I think that’s probably as an attractive an investment as you can make now.”  Warren Buffett, CNBC Squawk Box interview

If you aren’t investing in real estate right now, you are making a mistake – it’s that simple. Yes, you might have been burned by the real estate market collapse, or maybe you just knew someone who was – it doesn’t matter – if you aren’t buying property today you are missing out. This is a bold statement, but as you can see, one that is supported by one of the greatest investors of all time. Don’t take our word for it – or Warren Buffett’s for that matter – we are prepared to back up our statement with facts that non real estate investors should find very interesting.

Real Estate Fundamentals Are Changing

The United States is quickly transitioning from a home ownership society to one of renters. Home ownership in the U.S. currently sits around 66.4 percent, but that number is expected to drop down to 59.7 percent over the next several years, as delinquent borrowers drop out of the market – according to a recent Morgan Stanley Housing Market Insights report. The real estate market collapse has caused a few of things to happen. First and foremost, there have been a lot of foreclosures – this isn’t news to you we are sure. But what is often overlooked, is that just about every time someone loses a home to foreclosure, a new renter is created. That isn’t the only thing causing an increase in the number of renters, though.

In addition to the foreclosures, banks are now making it much more difficult for people to become homeowners. Only a few years ago, just about anyone who wanted to could buy a home – that is no longer the case. Gone are the days when people with marginal credit could get 100 percent financing, or even 90 percent financing for that matter. In order to buy a home in today’s market a person must have a decent amount of money to put down, as well as fairly good credit.

Lastly, the real estate market collapse did something else – it caused many people to fear buying a home. After all, who is going to invest in a home if they feel like the value will just continue dropping? A large number of people who could purchase a home, are sitting on the sidelines waiting for the market to recover – or truthfully for the media to tell them that it has. Good investors, though, know that many markets in the U.S. have already started to recover – despite what the media says. If you wait for the mainstream media to tell you it is okay to start investing again – you’ve already missed out on your chance.

Prices Are Low, And Rental Yields Increasing

There are many different types of real estate investment, but we are of the mindset that nothing beats the tried and true buy and hold method. If you buy a property with the intent of holding onto it over the long haul, then you should – for the most part – be able to judge the validity of an investment before you ever buy it. It is not hard to figure out what the going rent should be for a particular property, nor is it difficult to figure out what your expenses for the property will be. So if you are able to figure out how much you are going to spend, and how much the property will generate in income – then before you ever invest a single cent, you should know whether to buy it or not. If the property isn’t going to generate significant cash flow for you – don’t buy it. If you are banking on appreciation, then you are bringing on added risk. As long as the property makes you money every month, you can hold out through the ups and downs of the real estate market. So many investors seemed to overlook this basic principal of real estate investment during the bubble, and we all know what happened to those investors.

Today’s real estate market offers an incredible opportunity for investors. Thanks to the real estate market collapse, prices have fallen by as much as 50-60 percent in some markets, while rental rates for the most part have stayed the same or increased. As we brought up earlier, the rental market is only getting better for landlords. With the number of renters increasing, rents rising and property prices lower than they have been in years – now is the time to buy.

We, at HomeUnion Services, are in the business of reducing the risk for investors in a number of ways. First, we only operate in stable cash flow zones (more about them in future articles) in 6 markets (Chicago, Atlanta, Memphis, Pittsburgh, Birmingham, Memphis & Kansas City) that offer our investors great yields – with minimum risk. These 6 markets are in no means the only markets investors should be looking at, but they are a great starting point for investors considering to get into real estate. These markets enjoy stable economies, and are large enough to provide investors with lots of choices in terms of investment properties and tenants.

Commercial Investors Are Beginning To Invest

Typically when you think of single family real estate investors, you don’t think of commercial investors like hedge funds, insurance companies and the like. However, these larger investors are beginning to see the incredible investment opportunity present in today’s market, and they aren’t about to pass up on easy money. The FHFA recently announced a program that will allow large investors to bid on foreclosed properties in bulk, and the interest doesn’t stop there. This article from the Wall Street Journal, talks about several hedge funds that have begun to invest in single family homes in order to increase their fund’s performance.

We understand that you aren’t going to be buying properties by the hundreds or thousands like these funds, however, there is a reason they are buying single family homes when historically they have avoided them – like Buffett, they see the potential to generate significant returns. Buying single family properties presents significant challenges for large investors, and represents a dramatic mind shift in investment philosophy for them – don’t overlook this. These people are paid a lot of money to find the very best investment opportunities in the world, and they are able to invest in a lot of things that normal people can’t. The fact that they are saying the very best investment available to them right now is single family real estate should speak to you.

Overlooking single family real estate as the incredible investment opportunity it is – at this very moment – is going to be one of the biggest mistakes millions of investors make in their entire lifetimes. Hopefully our article has inspired you to not make this mistake, but if we haven’t convinced you yet, we urge you to at least look into it further. Don’t take our word for it, do your own due diligence, you will be amazed at what you discover.

30-Year Mortgage Rates Edge Above 4%

30-Year Mortgage Rates Edge Above 4%

Mortgage rates moved up quite a bit this week, following higher bond yields and improving economic data, Freddie Mac reports in its weekly mortgage market survey.

“Mortgage rates are catching up with increases in U.S. Treasury bond yields, placing the average 30-year fixed mortgage rate above 4 percent for the first time since the end of October 2011,” says Frank Nothaft, Freddie Mac’s chief economist. “Bond yields rose over the past two weeks in part due to an improving assessment of the state of the economy by the Federal Reserve, better than expected results of commercial bank stress tests, and the likelihood of a second bailout for Greece.”

The 30-year mortgage rate, the most popular choice of home buyers, took a big leap upward, after hovering below 4 percent and sitting at all-time record lows for weeks.

Here’s a closer look at rates for the week ending March 22:

• 30-year fixed-rate mortgages: averaged 4.08 percent, with an average 0.8 point, up from last week’s 3.92 percent. The 30-year rate has not been above 4 percent since Oct. 27, 2011, when it averaged 4.10 percent. Since then, it has hovered below 4 percent and at all-time record lows.
• 15-year fixed-rate mortgages: averaged 3.30 percent, with an average 0.8 point, also rising from last week’s 3.16 percent average. Last year at this time, 15-year rates averaged 4.04 percent.
• 5-year adjustable-rate mortgages: averaged 2.96 percent, with an average 0.7 point, a rise over last week’s 2.83 percent average. Last year, 5-year ARMs averaged 3.62 percent at this time.
• 1-year ARMs: averaged 2.84 percent, with an average 0.6 point, rising from last week’s 2.79 percent. A year ago at this time, 1-year ARMs averaged 3.21 percent.

Source: Freddie Mac

Buying is Cheaper Than Renting in Nearly All Major Cities

Buying is Cheaper Than Renting in Nearly All Major Cities

Home buying is the smarter choice than renting, according to Trulia’s Winter 2012 Rent vs. Buy Index.

Buying a home is more affordable than renting in 98 of the nation’s 100 largest metro areas, according to the index, which tracks asking prices for rental units compared to for-sale homes in major metro areas.

The only two metros out of the 100 tracked where renting was found to be the better deal: Honolulu and San Francisco. Still, the index notes that if you plan to stay in those markets more than five years, you might still be better off owning than renting in those markets too.

Falling home values and low mortgage rates have made home ownership more affordable. Meanwhile, rents have been on the rise.

“As rents rise and prices stagnate, home ownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” says Jed Kolko, Trulia’s chief economist. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring home owners face.”

Top 10 Metros to Buy vs. Rent

1. Detroit

2. Oklahoma City, Okla.

3. Dayton, Ohio

4. Warren-Troy-Farmington Hills, Mich.

5. Toledo, Ohio

6. Grand Rapids, Mich.

7. Cleveland, Ohio

8. Atlanta

9. Gary, Ind.

10. Memphis, Tenn.