Jason Schweiger

There is a lot of confusion about the "no cost" refinance. What people need to realize is that there are always costs on a loan such as appraisal, underwriting, processing, title, escrow, and etc,. The difference is that with a "no cost" loan the rate is increased by a certain amount of basis points, depending on the loan amount, to create a credit from the lender to the borrower to cover these costs. This way the borrower does not pay the lender costs, but will pay for them in the rate.

This is great for a borrower that plans to keep the loan for less than 6-7 years. If the borrowwer plans to keep the loan longer than this period, they could be costing themselves over the long term because they will pay more interest from the higher rate.

This is careful to consider when trying to get the lender to pay the closing costs. If you are planning on keeping the loan for more than the above mentioned term, the better option is to lock the lower rate, pay the closing costs, but roll them in to the loan. This way you do not pay them out of pocket and this works out to more savings over the long term.

FHA Annual Mortgage Insurance Premium Increase

The housing market continues to keep experts and analysts on their toes. I assume this will pattern of uncertainty will continue for at least 2011 and partially in to 2012, with more steadiness at that time.

While existing-home sales rose again in January and are outpacing year-ago levels, we are still seeing a drop in home prices across much the country. Existing-home sales increased 2.7 percent in January and are 5.3 percent above January of 2010. Lawrence Yun, NAR chief economist, sees the rise as positive, but with room for improvement. "The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence," Yun said. "The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity."

Regionally, the West saw the largest existing-home sales increase. In the West they rose 7.9 percent and are 7.0 percent above January 2010. The Midwest and South also saw monthly rises -- up 1.8 and 3.6 percent respectively.The Northeast didn't fare as well. The Northeastern region is down 4.6 from December and down 1.2 from year ago levels. The most recent reports from the Case-Shiller Index have brought on a slew of comments from the experts. The Case-Shiller quarterly index showed prices fell 3.9 percent in the fourth quarter and 4.1 percent for all of 2010. Karl Case reports that the housing market is "a rocky bottom with a down trend." And, unfortunately, he was the optimist! Mr. Robert Shiller, on the other hand, reported that the increased precedence of foreclosures, as well as the impending decisions over the future of Freddie Mac and Fannie Mae, leaves risk of future declines at 15 to 25 percent.

Realty Trac reports that 26 percent of all homes sold in 2010 were foreclosures and short sales. The states with the largest percent of distressed sales were Nevada, at 57 percent of all sales; Arizona, at 49 percent; California, 44 percent; and Florida 36 percent.

It's the slow jobs recovery that is partially to blame for this second hit on the housing market, however, new reports from the Labor Department indicate that jobless claims fells again last week. It is now at the lowest levels since late July 2008. This is a bit of welcome news for a market that is yearning for a bright spot.

That's right. Smart investment money is starting to come off the sidelines as those investors recognize the value in Puget Sound real estate. Prices have adjusted to value levels, and in some cases, way below value levels. That brings the folks who have been sitting on the bench into the game. And that is good news because it helps to shape the perception of others.

Of course it's always about location as location proves value. A quality product in a quality location at a value price. That's the shape of the current market.

Should you be buying right now in our Seattle Tacoma area? It sures seems like the value is there. Anytime you can buy at the same cost of renting, which is about what we have, the time to buy is upon us. As an investor myself, we are looking at some homes to buy as investment and you might think about buying now too.

No news can sometimes be good news. According to the December Home Price Index, recently released by analytic firm CoreLogic, "2010 shows home prices stabilized with the average annual HPI index showing no change relative to 2009."

Month over month, however, home prices were still down in December, with prices declining by 5.46 percent from November. This was the fifth straight month of declines. Home prices were also down in some unexpected areas. While declines in home values were expected in previous boom areas, such as California and Florida, declines have now been surfacing in some new, unlikely cities.

A recent article in the New York Times highlighted the affects of this down market on such areas as Seattle, Minneapolis, and Miami. According to Zillow.com, Seattle is down about 31 percent from its mid-2007 peak, and could see another 10 percent dip on the horizon. Stan Humphries, the chief economist for Zillow, sees a 5 to 7 percent decline in the rest of the nation's future. He says, "If these declines are sustained, as we expect to happen in many markets, the result will be a "double dip " in home values, defined as two periods of sustained declines in home values separated by a brief period of stabilization or recovery."
It's not all gloom and doom. Some states are seeing positive appreciation. Corelogic reports that "excluding distressed sales, the five states with the highest appreciation were: Hawaii (+6.15 percent), North Dakota (+6.03 percent), West Virginia (+3.53 percent), New York (+3.27 percent), and District of Columbia (+2.64 percent).

The Obama Administrations recent call for an orderly transition from the current form of the secondary mortgage market also has some experts breathing a welcome sigh of relief. The National Association of Realtors reports that they believe "we cannot have a restoration of the former secondary mortgage market with entities that took private profits while pushing losses onto the taxpayer. The new system must involve some government presence, outside of FHA, USDA, and the Department of Veterans Affairs, to ensure a continued flow of capital to housing markets during economic downturns when large lenders flee the housing market." NAR President Ron Phipps reports, "NAR believes that the size of the government's participation in housing finance should decrease if the market is to function properly." NAR's economists estimate that a retreat of capital from the housing market will negatively impact the economy; because for every 1,000 home sales, 500 jobs are created for the country.
Improvements are also being seen in the 55+ housing market, a market that was stalled in the second half of last year.

Recent reports from the National Association of Home Builders (NAHB) indicate that builders are more confident now that the slump has ended. "The normal course of purchasing a new home in anticipation of or upon entering retirement has been interrupted by the fall in Baby Boomers' house values and reduction in their home equity," said NAHB Chief Economist David Crowe. "Boomers are finding that the market for their current home remains soft and potential buyers cannot qualify for affordable mortgages. Even those with the ability to buy a new home are finding a limited selection, as builders cannot get loans to build homes." However, for a little leaven in the loaf, expected sales (six months into the future) dropped five points on the Housing Index scale.