Good Morning
It is a bit of a rainy day here is Georgia Lake Country but overall spring is in the air. Prices have come down over the winter and buyers are again beginning to think about lake property. There are some great deals to be found on both Lake Oconee & Lake Sinclair. Today, however, I am going to point out some of the incentives for the Lake & Golf communities, Reynolds Plantation.
For Reynolds company homesite purchases:
One can purchase a homesite & membership for 5% down and no payments for 24 months.
As you can see now is a good time to get out to the area and take advantage of some of these nice incentives. If you have any questions please feel free to contact me at 404-272-8037, bradwarnock@remax.net or www.BeAtTheLake.com
Just a quick update on the housing market. As always let me know if you have any questions. 404-272-8037, bradwarnock@remax.net or www.BeAtTheLake.com.
Monthly Home Sales Rise 230,000 In February 2009
Each month, the National Association of REALTORS® releases a study called the Existing Home Sales report. It's a detailed look at "used" home sale data from all four regions of the country.
Among the key findings of each Existing Home Sales report is something called the "median sales price", the statistical price point at which half of the homes in the U.S. sold for more, and half sold for less.
Last month, the median sales price in the United States fell to $165,400, down 15.5 percent from a year ago.
Nevertheless, just because the median sales price is lower from last year doesn't mean that the housing market is losing steam. The median sales price is just the middle point of all home sales in all U.S. markets. By definition, it groups New York City and Danville , Illinois ; Los Angeles and Cheyenne -- markets that have little do with one another.
When median sales prices are falling, it doesn't point to housing weakness, per se -- just that more homes are selling at the lower end of the pricing spectrum than at the higher end.
Going forward, it's believed that a reduction in home supplies is the key to a complete, national housing recovery. It's encouraging, therefore, in a month known for a high volume of new listings, that the number of homes sold kept pace with the number of new homes available for sale.
The current housing inventory stands at 9.7 months, flat from January. (Image courtesy: The Wall Street Journal)
Good Morning
Here is a mortgage update from Jeff Hancock, Senior Loan Officer, Lake Oconee Community Bank.
5 Nuggets of Good News
The stock market staged its biggest rally of the year yesterday with the DOW up over 370 points! Normally, a rally like this pulls investors out of the bond market and pushes mortgage rates higher. But this did not happen yesterday as mortgage rates stayed flat. This is an indication that new money came into the market, which is good news!
More good news to report as the Fed continues to purchase huge chunks of Mortgage-Backed Securities, which is keeping conforming mortgage rates under 5%!
Also, consumer credit rose in January, to the surprise of economists who had predicted a decline of $6.6 billion. Although Americans increased their borrowing activity only by a modest $1.76 billion, bringing the month's volume to $2.564 trillion, the figure reversed a downward pattern that has dogged consumer credit for four out of the previous five months.
In addition, the retail industry reported its first monthly gain in February since sales began declining last September. Discount chains like Wal-Mart were the biggest beneficiaries. Wal-Mart recorded its best sales performance in nine months. Falling gas prices have moderately contributed to increased consumer spending as consumers had $14 billion more to spend elsewhere in 2009 than in 2008.
And, finally, first-time home buyers all over the country are calling in to mortgage companies to find out more details about the $8000 tax incentive plan (see attachment for more info) and to find out for how much they qualify. There is no doubt this will lead to some solid real estate sales in the Spring and Summer.
Maybe we our slowly turning the corner....
The Year of Appraisal Changes
There are a lot of changes going on in the residential real estate industry right now, but when we look back on 2009, we will probably remember this as the year of the appraisal changes. As a reaction to a growing problem with fraudulent appraisal practices, the NY Attorney General threatened to sue Fannie Mae and Freddie Mac. After literally over a year of negotiations, a new policy that we all must adhere to has been released called the 'Home Valuation Code of Conduct'. This policy becomes effective on May 1st and its main objective is to "enhance the independence of appraisers in order to protect the integrity of the appraisal process." It requires lenders to engage in selecting appraisal professionals via independent and impartial processes. The code covers a lot of ground but the major stipulation that you need to be aware of is that a lender's loan production staff will be forbidden from selecting, retaining, or recommending particular appraisers. Lenders will no longer be able to use appraisals that have been selected by loan officers, real estate agents, or other third parties. As a solution, many of the big banks are moving to national appraiser firms. Talk about a disaster waiting to happen! The service levels of these firms is not high to say the least, and they also drive up the appraisal cost. Mortgage brokers are also going to be extremely affected as well as they will have to rely on the lender to who they are brokering to order the appraisal. Again, mortgage brokers will not be able to order appraisals on the front end of a transaction! Talk about a loss of control and a delay in their turn-around times! Smaller mortgage companies are busy trying to find creative ways to comply. At Fairfield Mortgage, our plan is to keep our existing list of appraisers intact and to allow a computer to assign the appraisers on a rotating basis. We are confident that we will not miss a beat in our level of service through our plan!
Financial Stability Plan
More details of the Financial Stability Plan were released last week. The program is designed to assist home owners whose loans are owned or guaranteed by Fannie Mae or Freddie Mac, whose payments are current, and who have loan amounts no more than 105% of the value of the home. Lenders are still trying to figure out how the program will work and how best to implement the new plan. This should help a lot of people and lenders should be in a position to begin implementing this plan as early as next week. A website (www.financialstability.gov) has been established to help home owners determine if their loan is owned or guaranteed by Fannie or Freddie and whether they will qualify under this program.
Win $1000!
This year, in conjunction with our parent company, Shelter Mortgage, we are once again celebrating the "madness" of college basketball's NCAA tournament with our "Slammin Challenge." You should have already received one e-mail already and you will continue to get a few more prompting you to go online and pick the winners of this year's tournament games. The tournament bracket will be released this Sunday afternoon and you will have between Mar 15th and Mar 19th to make your picks. There is no entry fee and the winner takes home $1000 cash! Also, we will be giving away $500 for 2nd place, $250 for 3rd place, and an iPod Shuffle for last place! How can you afford not to play?
Rate Update
Conforming mortgage rates are holding steady under 5%:
| Conforming | Non-Conforming | FHA | VA | |
| Loan Amount | < $417,000 | > $417,000 | < $320,850 | < $1,000,000 |
| 30 Year Fixed | 4.999% | 7.500% | 5.500% | 5.500% |
| 15 Year Fixed | 4.625% | 7.250% | 5.000% | 5.000% |
| 7 Year ARM | 6.250% | |||
| 5 Year ARM | 6.750% | |||
| 3 Year ARM | 7.000% |
The above rates are for purchase loans and are intended to give you an overall idea of how rates are changing from week to week. Other factors such as credit score, down payment, and number of days the rate is locked all contribute to the exact rate, which is subject to change at any time and without notification. The Conforming rates above apply to purchase loan sizes $150,000 - $417,000 and carry zero discount points. Rates for lower loan amounts are slightly higher. Lower rates are also available for all programs with discount points. Qualification is subject to credit and property approval and other restrictions may apply. Looking Ahead
The Economic Calendar has a light schedule this week. Thursday's Retail Sales report will be the primary economic data. Retail Sales account for about 70% of economic activity. Import Prices, Consumer Sentiment, and the Trade Balance will also be released on Friday. Treasury auctions and new information on government programs will also have an ongoing impact this week.
As Alway if I can help with any real estate needs in the Lake Oconee or Lake Sinclair areas please let me know or visit my website at www.BeAtTheLake.com.
It is a great day here in Georgia's Lake Country. The temperatures for the last few days has been in the upper 60's and low 70's and I have spent the last couple of days in shorts. Great golf weather considering this is the beginning of February.
Many of my clients have been asking what is going on with mortgage rates and when might be the best time to purchase or refinance a home? For more on this I will turn to mortgage expert Jeff Hancock, Senior Loan Officer for Lake Oconee Community Bank.
Good News and Help May Be on the Way
Finally, some good housing news to pass along. In case you missed it last week, December Pending Home Sales rose 6% from November! Pending Home Sales are a leading indicator for the housing market so this is a big deal and will, hopefully, translate into a little positive momentum in the months ahead. The housing market may soon receive another boost as well. On Thursday, the Senate unanimously approved up to a $15,000 tax credit for the purchase of a home in 2009! This also has the potential to be a huge deal as this would apply to all home buyers and not just first-timers and double the amount of the existing $7500 tax break! It is important to understand that this is a tax credit and not a deduction, meaning that it allows one to subtract the entire $15,000 (or 10% of the home's purchase price, whichever is less) from one's tax bill. Surely, this would get some people moving with their home purchase plans! In fact, I was speaking to a first-time buyer just this morning who was willing to buy if this goes through. I imagine that there are many out there just like him. We have hope!
Mortgage Rates Flat Despite Job Losses
Normally, weaker than expected employment data and a significant increase in the Fed purchase of mortgage backed securities (MBS) leads to lower rates. But not last week. Mortgage rates stayed above 5% mostly due to concerns about the potential increase in government spending and the supply of debt. The House passed one fiscal stimulus plan last week, and the Senate is expected to vote on its version any day now. The combined government spending for this new package, along with the TARP program and a proposed bank cleanup plan, will total trillions of dollars. An enormous amount of new debt will be issued to pay for all the government programs and this may have the effect of pushing rates higher. There is continued talk of some sort of government-sponsored 4-4.5% mortgage rate though. It will be very interesting to see how this plays out in the days ahead.
It's a widely held view that the economy is very weak right now, and Friday's downbeat Employment report came with little surprise. The US economy lost about 600K jobs in January, following a decline of 3 million jobs in 2008. The Unemployment Rate jumped to 7.6% from 7.2%. This weak report will provide lawmakers another reason to pass the stimulus package.
GE Announces Debt Ratio Limit of 41%
I remember when I got into the mortgage industry back in the 90's. At that time, mortgage guidelines were very strict, especially for loans with less than 20% down that required mortgage insurance. One of the strictest guidelines was the debt ratio, which was limited to 36% on a Conventional loan and 41% on an FHA loan. Well, we are gradually returning back to that era. Last week, one of the leading PMI companies, GE, announced that their maximum debt-to-income ratio (dti) will be limited to 41% with no exceptions. Currently, the other PMI companies have a limit of 45%, but it seems like just a matter of time until they match this limit. Unfortunately, this limitation will squeeze some out of the home they want to buy and into a lower price range.
Refinancing a Home Recently on the Market
Some more good news to report. Home owners that put their homes on the market have had to wait at least six months before they could refi their home. Fannie Mae changed their stance on this last week and will now allow a home to be refinanced if it has been off of the market for at least 30 days.
Good Thursday morning. It is a beautiful day in Georgia's Lake & Golf Country. It looks to be a great weekend here at the Lakes. The leaves are right in the peak of changing colors and all around the lakes are beautiful picturesque landscapes. A breathtaking sight, especially first thing in the morning or at sunset.
To abrutly change the topic. Many of my clients have been asking about the mortgage industry and the changes that have been implemented. For more on this I will turn to the senior loan officer at Lake Oconee Community Bank, Jeff Hancock.
Fed Cuts to Stimulate Economy
Happy November to you and let's all be thankful that the month of October is finally behind us! As we roll into November, the economic data points to an economy that is slowing sharply. To try to jump start things a bit, the Fed cut the target Fed Funds rate on Wednesday by one half point to 1.00%. The vote on this was unanimous and followed a coordinated half point rate cut on October 8th. Investors also believe the Fed's statement following the meeting last week left the door open for further rate cuts and, as a result, they have priced in another half point rate cut before the end of the year. Clearly, the Fed is preoccupied with boosting near-term economic growth. While their aggressive short-term stimulus is good for the stock market, mortgage investors are worried about its impact on long-term inflation, and those concerns helped pushed mortgage rates higher last week.
Typically, falling oil prices, subsiding inflation, and poor economic news lead to lower mortgage rates. However, recently, the opposite has been the case as mortgage rates have pushed higher. One of the major reasons for this is that investors, particularly important foreign investors, have been reluctant to invest in Fannie Mae and Freddie Mac mortgage backed securities. As of late, government officials have been sending mixed messages and raising some concern as to whether Fannie / Freddie will actually have the long-term backing of the government. Moving forward, if the government can unambiguously convince investors that it will stand behind the Fannie / Freddie guarantees, then mortgage rates surely will move lower.
To end on a positive note, the LIBOR rate index has been falling and is now at the lowest level since mid-September. A fall in the LIBOR indicates that banks are more willing to lend to one another, which is what the Bailout Plan was designed to do. As crazy as the month of October was, let's not lose sight that the stock market did actually finish the month on a positive note last week as the DOW surged 889 points on Tuesday. Some analysts believe the market is showing signs of bottoming out. Let's hope they are right!
In other news last week:
Time Is Running Out on the $7500 Tax Credit
Created as part of the Housing and Economic Recovery Act of 2008, the tax credit was enacted in July of this year to encourage home buying and help you generate some sells. It is only temporary and you should market it for all it's worth over the months ahead. Retroactive to homes bought on or after April 9, 2008, the tax credit will expire in July, 2009. Here are the nuts and bolts you need to know about the credit:
How does it work?
The tax credit is actually a 15 year interest-free loan where the buyer will repay 1/15th of the loan each year via a tax credit against any Federal income taxes owed. Thus, with a $7500 limit, the maximum payment each year would be $500. The repayment begins two years after the credit is taken. Furthermore, if the homeowner sells the home during the 15 year period, he/she has to repay the balance of the loan from the profit of the home sale (if there is insufficient profit, then the remaining payback would be forgiven).
What's so great about a tax credit?
A tax credit is more valuable than a tax deduction, but most people don't know there's even a difference. A tax credit reduces the actual amount of tax due. A tax deduction only reduces the amount of taxable income. For example, if your client owed $3,000 in taxes for 2008, but qualified for the full $7,500 tax credit, it would cancel the entire amount he owes and still leave $4,500 which he would receive as a tax refund!
Who qualifies for the tax credit?
The credit is for first-time home buyers as well as anyone who hasn't owned a home in the past three years that can meet the income requirements. Single taxpayers can claim the full credit with incomes up to $75,000 and married couples up to $150,000. This credit is available for owner-occupied U.S. properties.
How much is the tax credit?
The tax credit goes up to 10% of the purchase price of a new or existing home up to a limit of $7,500.
As always I will I encourage all inquiries and may be contacted at 404-272-8037, bradwarnock@remax.net or through my website www.BeAtTheLake.com. Warmest Regards- Brad
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LAKE OCONEE & LAKE SINCLAIR- Georgia's Top Golf, Fishing, and Recreational lakes.
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