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special incentives to prospective buyers

03-10-12
dale taylor chicago illinois realtor chicago illinois homes townhomes condos
dale taylor chicago illinois realtor chicago illinois homes townhomes condos: Real Estate Agent in Frankfort, IL
  • view my blog
  • Office: (815) 485-5500
  • Mobile: (708) 439-0165

Fannie Mae, that government-owned (that means you and me) mortgage giant is the largest buyer of mortgage loans in the United States. It pretty much has always been this way since Fannie’s charter was changed back in 1968. When a lender makes a mortgage loan that conforms to Fannie guidelines, that lender may sell that mortgage loan to Fannie Mae for a price, as reported by Richard hartian.

Why do lenders sell loans? When a lender sells a loan they can make an instant profit on that loan in lieu of collecting interest payments over the years, but more importantly, it provides the lender with additional capital to make more loans. It’s a never-ending process that keeps the mortgage markets liquid.

But something happened during this mortgage buying process that has given Fannie Mae a bit of a problem: thousands and thousands of the loans that were sold to Fannie Mae went bad. Homes were foreclosed upon and now Fannie Mae is sitting on some real estate they’d rather not own; and this real estate portfolio is growing every day.

So what do you do when you have too much of something you don’t want? You provide special incentives to prospective buyers. Fannie has done just that with the Fannie Mae HomePath program, perhaps the most underrated home buying opportunity in the country.

Fannie Mae recently published a special website designed to showcase newly foreclosed properties, financing options and buying incentives at www.homepath.com.

Fannie Mae HomePath RenovationThis new program provides those who intend to occupy the property a 15-day “First Opportunity” to make an offer on these homes. The special incentives include:

  • Down payment As Low As 3%
  • No Appraisal Required
  • No Mortgage Insurance Required
  • Option To Finance The Closing Costs
  • If A Condo, The Condo Project Requirements Are Waived

Did you get all that? 3% down? No appraisal? Option to finance the closing costs?

That’s right. Fannie might be taking a hit on this program, but it’s a lot better for Fannie Mae to implement this program than to keep those non-performing assets (loans when no payments are made) on their books.

Are you a real estate investor? After the 15-day “First Look” period expires, then occupancy requirements are also waived. Further still, HomePath has a special “Renovation Program” that allows borrowers to both acquire the property in addition to financing up to $35,000 for repairs and upgrades!.

The financed amount that can be used for renovations is limited to 35% of the “as repaired” value of the home. “As repaired” is the value of the home once the repairs have been completed. For example, a Fannie HomePath home is listed and needs a new roof and plumbing. If the value after repairs is $100,000, then up to 35% of that amount is available to be financed into the new loan; or $35,000. Any amount above $35,000 can be paid in cash at closing The value used for loan purposes is the “as repaired” value of the home, or the value of the home once the repairs have been completed.

This program works in favor for those who want to buy a condo, yet find the condominium project falls outside of Fannie’s conventional condominium standards. This facet alone makes the HomePath program one to explore and makes this loan one of the most competitive on the market.

When you combine this competitive program and discounted homes with the historic interest rates we’re currently enjoying then this true “win-win” opportunity might very well be a once-in-a-lifetime event.

Not every lender participates in this program and fewer still are aware the program is even in existence. For that reason it’s critical to find a lender that has previous experience with HomePath.

If you’re looking for a true buying opportunity, explore the HomePath program. Homeowners and investors who have used this unique program have unearthed a true gem. It’s worth your time to explore.

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most important thing you can do to prepare your home for sale is...

03-10-12
dale taylor chicago illinois realtor chicago illinois homes townhomes condos
dale taylor chicago illinois realtor chicago illinois homes townhomes condos: Real Estate Agent in Frankfort, IL
  • view my blog
  • Office: (815) 485-5500
  • Mobile: (708) 439-0165
Staging Secrets

Bye, Bye Clutter

The most important thing you can do to prepare your home for sale is to get rid of clutter. Make a house rule that for every new item that comes in, an old one has to leave. One of the major contributors to a cluttered look is having too much furniture. When professional stagers descend on a home being prepped for market, they often whisk away as much as half the owner's furnishings, and the house looks much bigger for it. You don't have to whittle that drastically, but take a hard look at what you have and ask yourself what you can live without.




Furniture Groupings

There's a common belief that rooms will feel larger and be easier to use if all the furniture is pushed against the walls, but that isn't the case. Instead, furnish your space by floating furniture away from walls. Reposition sofas and chairs into cozy conversational groups, and place pieces so that the traffic flow in a room is obvious. Not only will this make the space more user-friendly, but it will open up the room and make it seem larger.




Musical Furniture

Give yourself permission to move furniture, artwork and accessories among rooms on a whim. Just because you bought that armchair for the living room doesn't mean it won't look great anchoring a sitting area in your bedroom. And try perching a little-used dining-room table in front of a pretty window, top it with buffet lamps and other accessories, and press it into service as a beautiful writing desk or library table.




Room Transformations

If you have a room that serves only to gather junk, repurpose it into something that will add to the value of your home. The simple addition of a comfortable armchair, a small table and a lamp in a stairwell nook will transform it into a cozy reading spot. Or drape fabric on the walls of your basement, lay inexpensive rubber padding or a carpet remnant on the floor and toss in a few cushy pillows. Voila - a new meditation room or yoga studio.




Home Lighting

One of the things that make staged homes look so warm and welcoming is great lighting. As it turns out, many of our homes are improperly lighted. To remedy the problem, increase the wattage in your lamps and fixtures. Aim for a total of 100 watts for each 50 square feet. Don't depend on just one or two fixtures per room, either. Make sure you have three types of lighting: ambient (general or overhead), task (pendant, under-cabinet or reading) and accent (table and wall).




Make It Bigger

To make a room appear to be bigger than it is, paint it the same color as the adjacent room. If you have a small kitchen and dining room, a seamless look will make both rooms feel like one big space. And make a sunporch look bigger and more inviting by painting it green to reflect the color of nature. Another design trick: If you want to create the illusion of more space, paint the walls the same color as your drapery. It will give you a seamless and sophisticated look.




Neutral and Appealing

Painting a living room a fresh neutral color helps tone down any dated finishes in the space. Even if you were weaned on off-white walls, take a chance and test a quart of paint in a warm, neutral hue. These days, the definition of neutral extends way beyond beige, from warm tans and honeys to soft blue-greens. As for bold wall colors, they have a way of reducing offers, so go with neutrals in large spaces.




Color Experiment

Don't be afraid to use dark paint in a powder room, dining room or bedroom. A deep tone on the walls can make the space more intimate, dramatic and cozy. And you don't have to go whole hog - you can paint just an accent wall to draw attention to a dramatic fireplace or a lovely set of windows. If you have built-in bookcases or niches, experiment with painting the insides a color that will make them pop — say, a soft sage green to set off the white pottery displayed within.




Vary Wall Hangings

If your home is like most, the art is hung in a high line encircling each room. Big mistake. Placing your pictures, paintings and prints in such stereotypical spots can render them almost invisible. Art displayed creatively makes it stand out and shows off your space. So break up that line and vary the patterning and grouping.




Three's Company

Mixing the right accessories can make a room more inviting. When it comes to eye-pleasing accessorizing, odd numbers are preferable, especially three. Rather than lining up a trio of accessories in a row, imagine a triangle and place one object at each point. Scale is important, too, so in your group of three be sure to vary height and width, with the largest item at the back and the smallest in front. For maximum effect, group accessories by color, shape, texture or some other unifying element, stagers suggest.




Raid Your Yard

Staged homes are almost always graced with fresh flowers and pricey orchid arrangements, but you can get a similar effect simply by raiding your yard. Budding magnolia clippings or unfurling fern fronds herald the arrival of spring, summer blooms add splashes of cheerful color, blazing fall foliage warms up your decor on chilly autumn days and holly branches heavy with berries look smashing in winter.




Serene and Inviting

Create a relaxing bedroom setting with luxurious linens and soft colors that will make a potential home buyer want to hang out. Bedroom staging trick: If you don't have the money to buy a new bed, just get the frame, buy an inexpensive air mattress and dress it up with neutral-patterned bedding. And remember to declutter. By cleaning out your closets, you're showing off your storage space, which sells houses - it always ranks high on buyers' priority list.




New Faces

If you can't afford new cabinets, just get new doors and drawer fronts. Then paint everything to match and add new hardware. And instead of replacing the entire dishwasher, you may be able to get a new front panel. Check with the manufacturer to see if replacements are available for your model. If not, laminate paper, which goes on like contact paper, can be used to re-cover the existing panel.




Repaired Wood

Unfinished projects can scare off potential buyers, so finish them. Missing floorboards and large cracks in the sidewalk on the way to your door tend to be a red flag, for example, and they cost you less to fix than buyers might deduct from the asking price.




Prim and Polished

Having tile professionally painted can make a bathroom look brand new. And accessorizing can make buyers feel like they're in a spa. Put out items like rolled-up towels, decorative baskets and candles. It's a great way to create a polished look, and it doesn't cost much to do.

Original Source: HGTV.com

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the average homeowner accumulates more overall wealth than the average renter

03-10-12
dale taylor chicago illinois realtor chicago illinois homes townhomes condos
dale taylor chicago illinois realtor chicago illinois homes townhomes condos: Real Estate Agent in Frankfort, IL
  • view my blog
  • Office: (815) 485-5500
  • Mobile: (708) 439-0165
CREATING WEALTH THROUGH HOMEOWNERSHIP - THE PROOF



Several real estate economists have shown that the average homeowner accumulates more overall wealth than the average renter.[i] However, it is not clear how this is done. Is it that owned property usually appreciates at such a rate that, after considering leverage, returns to ownership are extraordinarily high? Said another way, might homeowners accumulate more overall wealth because ownership is a great levered equity creator through property appreciation? Or, is it that owners acquire greater wealth, on average, because they are systematically paying down a mortgage thereby creating equity thanks to loan amortization? In other words, paying off property creates wealth, as researched by Ken H. Johnson, Ph.D of Florida International University (FIU) and Editor of the Jounal of Housing Research.

In ongoing research being conducted by Beracha and Johnson,[ii] these and other questions concerning homeownership and the accumulation of wealth are being investigated. In earlier research, Beracha and Johnson show that renting is the superior investment strategy; however, in this earlier strict horserace between buying and renting, a very bold assumption is made. Specifically, it is assumed that any rent savings (from lower rent versus mortgage payments) are reinvested without fail. Thereby, after balancing all of the costs and benefits from ownership and comparing them to renters’ portfolios from reinvesting rent savings, renting wins.

The question, however, very quickly becomes that, in a setting where Americans generally save less than 5% of their disposable income, is this assumption realistic and how might the removal of this reinvestment decision alter the outcome of the horserace between buying and renting? As part of their current research, this question is directly addressed. In particular, Beracha and Johnson find that after allowing renters to spend any rent savings on consumption (beer, cookies, healthcare, education, etc.), ownership leads to greater wealth accumulation, on average. The graph below highlights this finding.



The graph looks at the ratio of renters’ portfolio values to owners’ proceeds from sale for the entire U.S. between 1978 and 2010 both with strict reinvestment of rent savings and without reinvestment of rent savings.[iii] Clearly, numbers greater than 1 indicate that renting leads to greater wealth accumulations, while numbers less than 1 indicate that homeownership creates greater wealth, on average.

When renters are forced to reinvest (top line in the graph), the results confirm the earlier findings of Beracha and Johnson (2012). That is, in a strict horserace between buying and renting, renting wins in the vast majority of cases. However, when renters are allowed to spend rent savings on consumption (i.e. economically act like the typical American consumer), homeownership wins in virtually all instances. Notice that in the bottom line of the graph (no reinvestment), the renters’ portfolio values divided by owners’ sale proceeds is great than 1 for only four of the 32 years of the study. Thus, when renters are allowed to spend rent savings, homeownership is the clear winner in the wealth accumulation horserace.

Finally, in the same current research, Beracha and Johnson find that allowing for property appreciation rates to increase as much as 20% over their actual historic values results in virtually no change in the outcomes concerning wealth accumulation. That is, property appreciation contributes only marginally to wealth accumulation.

Implications

Without proof many have speculated about this outcome for years. However, there is now actual quantifiable evidence that homeownership is not the great levered equity creator that it has so often been touted to be. Instead, it appears that homeownership creates extra wealth mainly through its ability to force owners to save rather than through property appreciation. Thus, homeownership appears to be a self-imposed savings plan, which through time leads to greater wealth accumulation as compared to comparable renters. In short, buying a home makes Americans save.

Who says that Americans are horrible savers? Apparently, we are not. We have simply been saving through our homes rather than putting our savings in the bank.

Endnotes

[i] Homeownership is the most viable path to wealth creation for the majority of Americans. See Engelhardt (1994), Haurin, Hendershott and Wachter (1996), and Rohe, Van Zandt and McCarhty (2002), among others.

[ii] Eli Beracha and Ken H. Johnson, 2012, Beer and Cookies Impact on Homeowners’ Wealth Accumulation, ongoing research.

[iii] The research assumes 8-year holding periods. When the holding period is allowed to vary between four and twelve years, the results change only marginally. Thus, holding period has very little to do with the results.

Original Source: The KCM Blog


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FHA will lower its Upfront Mortgage Insurance Premium

03-09-12
dale taylor chicago illinois realtor chicago illinois homes townhomes condos
dale taylor chicago illinois realtor chicago illinois homes townhomes condos: Real Estate Agent in Frankfort, IL
  • view my blog
  • Office: (815) 485-5500
  • Mobile: (708) 439-0165

FHA’s Streamline Refinance Program could benefit millions of borrowers whose mortgages are currently insured by FHA.

Cecelia Marlow a respected Loan Officer shares news beginning June 11, 2012, FHA will lower its Upfront Mortgage Insurance Premium (UFMIP) to just .01 percent and reduce its annual premium to .55 percent for certain FHA borrowers.

Qualifications:

1. Borrowers must be current on their existing FHA insured mortgage.

2. Mortgage must have been endorsed on or before May 31, 2009.

Currently, 3.4 million households with loans endorsed on or before May 31, 2009, pay more than a five percent annual interest rate on their FHA-insured mortgages. By refinancing through this streamlined process, it’s estimated that the average qualified FHA-insured borrower will save approximately $3,000 a year or $250 per month.

More Changes Ahead

Late last month, FHA also announced it will increase its upfront premiums on most other loans by 75 basis points to 1.75 percent. In addition, FHA will raise annual premiums 10 basis points and 35 basis points on mortgages higher than $625,500. Read FHA’s new Mortgagee Letter.

This will be effective for all FHA Mortgages originated after April 1, 2012.

Cecelia Marlow

Mortgage Banker

NMLS #294376

Contact Information

Direct (312) 738-6294

Fax (312) 491-7704

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The value of household real estate fell by $367.4 billion

03-09-12
dale taylor chicago illinois realtor chicago illinois homes townhomes condos
dale taylor chicago illinois realtor chicago illinois homes townhomes condos: Real Estate Agent in Frankfort, IL
  • view my blog
  • Office: (815) 485-5500
  • Mobile: (708) 439-0165

Household Worth in U.S Increases as Stock Prices Rebound

By Shobhana Chandra - Mar 8, 2012
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Foreclosure Aid May Help Property Investors

Household wealth in the U.S. climbed from October through December for the first time in three quarters as an increase in stock prices outstripped a decline in home values.

Net worth for households and non-profit groups increased by $1.19 trillion in the fourth quarter, or 2.1 percent from the previous three months, to $58.5 trillion, the Federal Reserve said today in its flow of funds report from Washington. Housing wealth decreased by the most in more than a year.

Enlarge image Household Worth in U.S. Rises for First Time in Three Quarters

Household Worth in U.S. Rises for First Time in Three Quarters

Household Worth in U.S. Rises for First Time in Three Quarters

Chip Chipman/Bloomberg

Buildings in San Francisco.

Buildings in San Francisco. Photographer: Chip Chipman/Bloomberg

Enlarge image Household Worth in U.S. Rises

Household Worth in U.S. Rises

Household Worth in U.S. Rises

Jacob Kepler/Bloomberg

Rows of houses stand in Las Vegas, Nevada.

Rows of houses stand in Las Vegas, Nevada. Photographer: Jacob Kepler/Bloomberg

The Standard & Poor’s 500 Index (SPX), which rose 11 percent in the final three months of 2011, is again climbing this year as the improving job market builds confidence in the expansion. At the same time, the gain in wealth last quarter was less than half the previous period’s slump, indicating households may continue to repair balance sheets hurt by the recession.

“Consumers are generally repairing their balance sheets,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “The performance of the stock market has been a crutch for households. Consumer spending is constrained by the need to pay down debt.”

Since reaching a five-year low of $50.5 trillion in the first quarter of 2009, net worth has improved by $8 trillion. That still leaves it $8.4 trillion below the record high of $66.8 trillion reached in the quarter ended June 2007, six months before the recession began.

Real-Estate Wealth

The value of household real estate fell by $367.4 billion in the last three months of 2011, the first decrease in three quarters.

Owners’ equity as a share of total household real-estate holdings dropped to 38.4 percent last quarter from 38.9 percent.

The S&P/Case-Shiller national index of home prices decreased 4 percent in the fourth quarter from the same time in 2010, according to figures released Feb. 28. The gauge fell 3.8 percent from the prior three months before seasonal adjustment, and fell 1.7 percent after taking those changes into account.

The value of financial assets, including stocks and pension fund holdings, held by American households increased by $1.46 trillion in the fourth quarter, according to today’s flow of funds data.

The S&P 500 has risen 7.6 percent this year through yesterday amid better-than-estimated economic data and expectations Europe would tame its debt crisis.

Household Debt

Household debt rose at a 0.3 percent annual rate last quarter, the first increase in more than three years, today’s report showed. Mortgage borrowing decreased at a 1.5 percent pace, the 11th consecutive drop. Other forms of consumer credit, including auto and student loans, climbed at a 6.9 percent pace, the biggest gain in at least seven years.

The labor market may help to repair household finances. Payrolls rose by 210,000 in February and the jobless rate held at 8.3 percent, according to the median forecast of economists surveyed by Bloomberg News before a Labor Department report tomorrow.

Company balance sheets are faring better than households, today’s report showed. Businesses had a record $2.23 trillion in cash and other liquid assets at the end of the fourth quarter, up from $2.12 trillion in the prior three months.

Total non-financial debt climbed at a 4.9 percent annual pace last quarter, led by a 13 percent increase by the federal government and a 4.6 percent gain among businesses. State and local government borrowing dropped at a 1 percent pace.

To contact the report on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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