Eileen Murphy, Curtis Lee "The Murphy-Lee Team"

Our friends at Acre Mortgage posted this on the current mortgage/real estate situation today and we wish to share it with all our clients.

HOUSING IS VITAL TO ECONOMIC RECOVERY

It’s my contention housing will lead the way in turning this economy around. After all, housing is the reason we are in this mess. The corruption and deceptive practice of the sub prime mortgage industry has, in my opinion, facilitated an economic tsunami. It has not only tumbled Wall Street, it has adversely affected most all “main streets” globally.

We must reach out to the most important sector of our population; the young and first time buyers. Most all of us prefer to own, the cost of Real Estate in today’s market offers great opportunities for those folks who still believe the “American Dream” is a reality. It’s unfortunate, however, the consistent rhetoric of the naysayers who voiced uninformed opinions regarding home loans are discouraging too many people to take the plunge into home ownership.

The fact is, mortgage money is plentiful. Processing and underwriting rules have reverted to the sensibility standards of the era prior to the sub-prime money giveaway. Today, Lenders need to verify an applicant’s ability to repay the loan in the evaluation process. No longer will money be lent based on unverifiable income and assets; or for applicants with sub par credit scores. The days when Lender based loan approvals on overvalued properties and under qualified borrowers are over; and will never return.

Mortgage Programs now exist for qualified borrowers with minimum investment and affordable payments. Incidentally, low or no down payment loans should no longer be considered a stigma. It has been proven VA loans, with the no down payment provision, represent the most stable and best performing loans in terms of defaults and payment history. It’s not about the product guidelines; it’s about making it affordable. Before Wall Street greed besieged us, the process of Lenders determining a borrowers’ affordability built this country, built communities, built stability and built hope. Essentially, corporate greed and personal bad decisions made by people who lacked the foresight and understanding of what they were buying, robbed or delayed the ability of the next generation to achieve the same dream.

Fixing the housing market, in my opinion, begins the healing; education is the foundation. Too many uninformed potentials sit on the sidelines waiting. I suspect the waiting is due to the unawareness of what is available and what is happening in this market. In terms of a monthly payment, there are legions of potential homeowners who do not know buying a home can be less expensive that renting. They have no clue that if the purchase contract is structured correctly, the cash out of pocket may represent a little more than a month and a half of a security deposit along with a month’s rent.

Most everyone, including the Real Estate Community, have yet to firmly grasp the premise of the FHA “buy it and fix it” 30 year fixed market rate mortgage. A startling means of purchasing a property, “as is”, that is otherwise “un-mortgageable” due to its condition. The ability to purchase a home, usually undervalued due to its condition, and including repairs/customizing with the financed mortgage, represents one way of reaching out to those potential homeowners. This underused and little known mortgage eliminates the concern of dealing with potentially costly repairs after taking ownership. In addition, the plan ensures the home will be compliant to all local codes. There is a one time closing with the pre-determined repairs escrow and paid to the contractor with the homeowner’s supervision and approval. There are numerous other benefits to this program, the FHA 203-K plan.

The “K” program is one of several plans available to entice those sidelined potentials. Also gaining popularity is the USDA no down payment plan, along with the 100% financing parameters of the VA program and the State backed Home Mortgage Financed Agency (HMFA). Additionally, there are local “smart start” incentives and County and State down payment assistance programs.

The moral of the story is hope. Not only for the many of potential homeowners still renting, but for a country in need of picking itself up and economically moving forward. Revenues generated from the revitalization of the neighborhoods and filling up those vacant and neglected homes will begin the road to recovery. The means to accomplish the goal is simple education for the new group of potential homeowners.

Hopefully, this starts it!

Chuck Reed
creed@acremortgage.com

www.SouthJerseyMortgageGuys.com

By: Matt Dornic

Published: November 9, 2011

Candidates be warned: Voters may make housing the make-or-break issue of the 2012 presidential election.

Without a widely supported federal plan to address the nation’s housing crisis, U.S. home owners, builders, and the hundreds of thousands of Americans employed in real estate-reliant industries should keep a close eye on GOP hopefuls and President Obama as the 2012 election cycle moves into full swing. Consistently ranked among top concerns for voters, housing may just be the issue to make or break a candidate’s White House run.

With less than a year remaining before Americans elect the nation’s next president, the housing slump has become a hot source of political ammunition between opponents. But not one has unveiled a real plan to address the ailing market. This could be for one of two reasons: Either prospective Republican nominees have failed to develop their housing platform or because, like Mitt Romney, they don’t intend to intervene.

Either way, housing-related criticism is being lobbed not just at the Obama administration and its imperfect programs, but also at the GOP candidates.

Case in point is a new ad campaign, created by the Democratic National Committee and targeting frontrunner Mitt Romney. Using audio of the former governor saying, "Don’t try and stop the foreclosure process — let it run its course and hit the bottom,” the commercial highlights one piece of a quote from an interview Romney gave to the Las Vegas Review-Journal’s editorial board last month.

Although some might argue that Romney’s quote was taken out of context, his “Believe in America Plan for Jobs and Economic Growth” barely touches on housing and instead focuses on tax cuts, less business regulation, and new energy initiatives.

But as foreclosures continue to plague the nation and with approximately 23% of mortgage-holding home owners underwater (as of second quarter 2011), surely some of the presidential hopefuls are addressing the housing sector, right? Here’s what we know about the candidates:

AP reports that Gov. Rick Perry’s fix for housing is to emphasize job creation. A spokesman for the governor said the “immediate remedy for housing is to get America working again. Creating jobs will address the housing concerns that are impacting communities throughout America."

Like Romney, it seems that Herman Cain’s answer is passive. "We need to get government out of the way," he said at last month’s debate in Las Vegas.

So far the most thoughtful position came from Newt Gingrich. The former Speaker of the House told Fox News’ Greta Van Susteren that small banks and removal of needless regulations may be the answer to the mortgage crisis.

”You have to repeal the Dodd-Frank bill because ... it dramatically regulates the banks,” Gingrich said. “It sends a signal to the regulators to tell them not to make the loans, not to roll over the money — and in effect, it encourages foreclosures and encourages the bank actually seizing the property."

"The minute you do that — literally, the minute you do that — it’s going to be easier for people to work their way out. You’ll have a dramatic decline in foreclosures,” he added.

Rep. Michele Bachmann has contributed virtually no plan to address the issue. Her strategy has been one of deflection, saying only that “[the White House] has failed you on this issue of housing and foreclosures. I will not fail you on this issue,” during the same debate.

But now, less than a year from the 2012 elections, a passive or low-profile approach to housing woes won’t sit well with voters. Candidate positions on housing will be important considerations to nearly seven of 10 Americans (69.6%) in the 2012 presidential and congressional elections, according to a national survey on housing from Move, Inc.

Look for housing to take center stage as the race for presidency really heats up in the next few months. And don’t be surprised if the first candidate to the finish line is the one who takes housing head on.

How important are housing issues for you in the 2012 presidential election?

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By: Curtis Lee
The Murphy-Lee Team
Prudential Zack Shore Properties

If William Shakespeare financed a home today he'd probably ask on the subject of mortgage points: "To pay or not to pay? That is the question."

Homebuyers direct the same question to their real estate agents. Here are some perspectives:

In its simplest definition, a point is an additional loan fee that is paid to the lender in exchange for a lower interest rate. It's called "buying down," and it allows you to reduce your rate for the life of the loan.

Let's say you secured a mortgage loan for $500,000 without points, at 4.6% on a 30-year mortgage, your payment would be approximately $2,560 a month. If you paid two points ($10,000), the interest rate in this example would go down to 4.1% and the monthly payment would decrease to around $2,415, a savings of $145 a month.

In this scenario, it would take you about eight years to recoup the money you paid up front, so if you are planning on staying in your home a while, this will save you money in the long-run.

Home buyers must answer some key questions to determine if paying points is a wise decision. Specifically:

•· How long will you keep the home?
•· Do you have extra money to pay points?
•· Could that money be better used for something else?

Money managers may suggest that a smarter option is to invest that $10,000 because you could do much better than your $140 savings, but you have to weigh the variables.

"Paying points depends on your career, your interests and all the things that predict your future," said financial advisor Thomas Watkins of Total Mortgage Services in Milford, Conn. "Points are paid up front while your savings will be spread out into the future. Therefore, you get more benefit if you own your home longer, or if you don't refinance for a long time."

The rule of thumb when it comes to points is simple: If you plan to stay in the house for less than three years, do not pay points. If you plan to stay in the house for more than five years, pay 1 to 2 points. If you'll be in the house for three to five years, paying points doesn't make a significant difference.

Another important aspect to consider: Since points are interest-payment related, they are fully deductible on your taxes in the year that you close. See your tax advisor for details.

Mortgage points can add up to valuable savings over the course of your loan, but the future isn't always predictable. Even if you "plan" on staying in your home for 20 years, changes in your career or family life could alter the plan.