Mark Finchem

People buy homes for many reasons but nearly all view the purchase as an investment. As such confidence in value usually plays the biggest roll of all. I've heard it said often, "the buyer sets value". For if there is no buyer willing to pay what the seller wants, there is no transaction and the property sits on the market.

Consider this; if a buyer waits for prices in general to drop 10% and in the mean time the mortgage interest rate rises 1% the payment will be the same. If the seller waits for a higher price it si likely the interest rate will be higher and a prospective buyer might be squeezed out of the market. The house continues to sit.

Trying to time a purchase or sale to "beat the market conditions" often backfires in the peaks and valleys of the homes sales marketplace. This is especially true the longer we are in a down market. When home sales are humming along and prices are rising everyone is optimistic, even euphoric as we saw just a few years ago. But that is when risk is at its highest.

While some folks -sellers in particular- may still be in panic mode due to depressed value, most have hit the point of depressed. The good news is hope and optimism have begun to spring up just in time for the point of maximum opportuity.

In the Tucson Arizona homes market, pricing has leveled off and we now see relative price stability. The median home price for October 2009 was at $200,000. (For more see http://www.markfinchem.com.z57preview.com/custom5.shtml )

The draw to Tucson is primarily climate. Sun and relatively warm winter temperatures mean outdoor activities. Business Week ranked Tucson the #1 place to retire (http://images.businessweek.com/ss/09/07/0702_affordable_places_to_retire/index.h0tm). * Credit to Steve Harney, Case Shiller & West Court Funds

Buyers need to know and we need to educate people that if interest rates go up just one percentage point, to six percent, as the New York Times suggests analysts are predicting, that will raise the cost of purchasing a home and wipe out a $10,000 decrease in price. Some buyers are sitting on the fence right now, concerned that prices still might fall. They mayfall a little more, but trying to time the market will cost Buyers dearly.

One thing propping up the market has been the Federal Reserve, which has been buying mortgage-backed securities to keep interest rates articicially low. As the Fed begins to curtail its purchases in the next few months, rates will become less appealing. Analysts predict rates will rise to at least 6 percent from the current 5 percent.

In reality, even if prices fall another ten percent, if interest rates rise one percent, the buyer's monthly mortgage payment will actually be higher.

Help me get the word out that if Buying should happend in the next 120 days! We must educate the potential Buyers that it is more than just price that makes a good deal. Instead, they should examine cost, which is made up of both price and FINANCING. I urge you to work through a trial balance sheet with every prospect and provide a +/- 10% price decline against a 1% interest delta worksheet. You may shock yourself.

* Sources Wall street Journal and Setve Harney

REALTORS work in the ultimate pay for performance environment. We don't get paid if we don't perform and we are held accountable for everything we do. So, if we are held to the high standard of care and ethics (NAR Code of Ethics), shouldn't the rest of the players in the system also be held accountable with a similar performance expectation?

FHA is taking unprecedented -and long overdue- steps to protect taxpayers from the fast and loose practices that some lenders have engaged in during recent times. The FHA has plans to implement serious credit policy changes to enhance risk management. I have always wondered why an organization like the FHA did not have the same safeguards that a major business would have like an effective Risk Management office with accountability & consequences.

Well, there is a new move toward accountability. The FHA has announced plans to hire a Chief Risk Officer for the first time in the agency's history. Another big plus is the policy shift toward responsibility for mortgage brokers; moving it away from taxpayers to the lenders who use mortgage brokers.

Someone really is paying attention to ethical, reliable and productive practices. For a more in depth understanding of the changes that are coming visit the NAR link. Hot Link

I recently attended a closing with a client -first time home buyer- who commented on the AED hung conspicuously on the wall near the Escrow Officer's private office. He asked, "Is that for resuscitating people who have a heart attack when they see the final cost?" A few minutes later my young buyer & I noticed a difference in fees from the pre-closing HUD-1.

In a few short weeks lenders will be held even more accountable for what happens at the closing table. Transparency will be the rule. The Washington Post writer Kenneth Harney's article lays out the changes. Harney writes, "Here's what's about to happen: Starting January 1, 2010, loan charges and settlement fees will be spelled out on a revised, more consumer friendly version of the good faith estimate form that borrower are supposed to receive within 3 days of their mortgage applications. Charges will fall into three broad catagories on the form:

- Fees that cannot increase from upfront estimates to final closing.

- Fee estimates that come with wiggle room, and can increase by as much as 10% in the aggregate from upfront estimates.

-Fees that can increase without limit, mainly because the lender has no control over them or because they are difficult to predict weeks in advance.

The article is a good read for a basic understanding of what is about to happen and why it is important to consumers. I think all most people really want is transparency into what is going to be paid, where is it going and why.

It's all good. I am a big fan of transparency and disclosure. Life is just better that way!

WOW! The Your Way Home Arizona Program is a program that is now officially open and ready for approved buyers. The state of Arizona has created a program that will allow buyers who qualify to access a grant of 22% of the purchase price if they buy bank owned foreclosure properties.

These properties must be bank foreclosures that are un-occupied. There are several qualifing criterial such as income limits by county, debt-to-income ratio limits, credit score minimums as well as home buyer classes to attend and complete. This is a golden opportunity to purchase a home in Tucson, Oro Valley or anywhere in Arizona if you are a first time home buyer. The 22% down payment can be used in conjunction with a traditional FHA loan which means you have a safe secure government insured mortgage while at the same time, your payment is significantly reduced because of the extra down payment.

HUD reposessions can be tough since they must generally close in 45 days and the YWHAZ program can take up to 60 days. That's where a good mortgage loan consultant is worth his/her weight in gold. I have a guy that I trust to handle these types of transactions. For a list of Fannie Mae and Freddie Mac reposessions contact me.